Betting Big on Harlem
By CARMEL MELOUNEY
About seven years ago, when Columbia University was battling West Harlem community groups about Columbia's massive expansion plan, advocates of the project pointed to the jobs and commercial activity that would be generated in the neighborhood as one of its selling points.
Today, with the first tower taking shape in Columbia's $6.3 billion expansion, commercial activity is stirring a few blocks away, where developers Scott Metzner and Jerry Salama are making a big bet that new office tenants are soon to arrive.
Their company, Janus Partners LLC, has been developing housing in West Harlem since 1988, but in more recent years Janus has switched to converting industrial buildings into office space. Today Janus owns about half a dozen commercial buildings with more than 360,000 square feet leased out to companies such as Dash Media PR, nonprofit arts organization Chashama and Reflective X-ray Optics LLC.
Janus also is investing heavily in new projects. It's redeveloping other industrial buildings, including an old malt warehouse that it is converting into a 17,000 square of entertainment space, probably a restaurant or catering hall.
And earlier this year, Janus took a big step with what would be its largest West Harlem project: the development of a $100 million commercial tower at the site of the old Taystee Bakery complex, an abandoned site at 125th and 126th streets between Amsterdam and Morningside avenues. In June, the city approved the sale of the city-owned site to Janus and its partner, Monadnock Construction Inc. The City Council in November approved a broad rezoning plan for West Harlem allowing manufacturing space like the Taystee site to be converted into commercial space.
The developers estimate that they will invest a total of $400 million into West Harlem, including all the projects now in the works. They hope to break ground on the Taystee Bakery late next year but they haven't yet lined up construction financing.
"We expect to be an important resource for the world-class entrepreneurial talent teaching and learning at…Columbia," Mr. Metzner said.
Janus's activity in the area is a sign that entrepreneurs are responding to Columbia's expansion with investments of their own. While the developers have been involved with West Harlem for years, they've been emboldened by the hope that the school becomes an even bigger incubator and magnet for small businesses than it's been in the past.
Other entrepreneurs are making bets on housing and retail, hoping the area is changing. "I wanted to get in before it was too late," said Samuel Thiam, one of the owners of Maison Harlem, a French bistro that opened in October on the corner of 127th Street and St. Nicholas Avenue. "We took a bit of a risk, but I just knew it was going to get back to being a trendy neighborhood."
To be sure, Columbia's expansion plan will take years to complete. Work is under way on the Jerome L. Greene Science Center, the centerpiece of the University's new campus, and a 14-story medical and graduate building.
But parts of the expansion, including teaching buildings and graduate school housing, aren't scheduled to be done until 2030.
Big plans for West Harlem have fizzled in the past. In 1999, for example, the city announced a plan to allow a gourmet supermarket to redevelop the old Taystee Bakery plant, but that plan failed to materialize, forcing the city to seek other uses.
West Harlem has been steadily overcoming the stigma that slowed its economic development in the past. Long ago, it was a thriving manufacturing area populated with milk-bottling plants, breweries and bakeries. But all of that activity receded decades ago, leaving many buildings vacant and derelict.
In the 1980s, rampant crime meant there was very little private investment in the area. "I literally couldn't get a broker to come up here to look," said Mr. Metzner, a former architect who got his start as a real-estate developer by participating in city housing programs during the Ed Koch administration.
Since then, developers such as Janus have redeveloped apartment buildings and commercial tenants have begun to be attracted to the area's cheap rents. Tenants in Janus's Mink Building, a converted fur warehouse at 1362 Amsterdam Ave., are paying rents in the mid-$30s-a-square-foot range.
Arthur Draznin, an executive managing director who has leased space for Janus, estimated comparable space would be at least $50 a square foot more in Midtown South, which is popular with technology and media companies. Mr. Draznin also noted that the city has a wide range of programs that can cut commercial taxes, rents and energy costs in West Harlem even further.
Crime remains a concern for many prospective tenants. Indeed, last month, when Wall Street Journal reporters were touring the area, they were interrupted by a foot chase between police and two young men that ended in an arrest. But crime statistics are dropping. NYPD Deputy Commissioner Paul J. Browne said that all crime is down in the West Harlem area, which is covered by the 26th Precinct, by 30% compared with 2001, and by 76% compared with 1993.
"The perception is far worse than the reality," said Mr. Metzner, but he added, "There's no question that everyone asks about safety."
Columbia has long been a major employer and engine of growth in Harlem but its relationship with the community has long been tempestuous. The university angered locals by quietly amassing properties for its 17-acre expansion plan and then asking the state to use its power of eminent domain to take the remaining property. The university eventually reached peace with the community by agreeing to contribute $150 million to community groups.
The expansion will take place primarily on four blocks from 129th to 133rd streets between Broadway and 12th Avenue.
Janus executives spent more than seven years working with community groups and participating in the planning on the rezoning and Columbia's expansion. "Never did we understand that the process would take as long as it did," Mr. Metzner said.
Janus already has attracted tenants from Columbia to its commercial projects. One early tenant in the Mink Building was Reflective X-ray Optics, which makes a special type of mirror coating for X-ray telescopes. The company's president, David Windt, was a research scientist in the Columbia Astrophysics Laboratory. "I wanted to stay in the neighborhood…to help foster close ties with Columbia," he said in an email.
The Janus developers eventually hope to create a commercial master-planned community with their properties including mid-block passageways and courtyards. They feel their space will be attractive to a wide variety of tenants besides those coming from Columbia, including advertising firms, art galleries, nonprofits and start-ups.
Said Mr. Salama, "We've stuck around, and we've done what we said we'd do."
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