Projects recently completed in the long-distressed neighborhood are helping revive its fortunes, which have been in decline since the 1930s. And the “New Markets” economic development tax credit Congress established last December can only brighten prospects further.
The situation in Harlem in recent years is “better, in terms of people having places in the neighborhood to shop, improving services,” says Karen Phillips, president of Abyssinian Development Corp., a nonprofit community organization in Harlem.
As recently as the mid 1980s, the city owned 60% of the property in Harlem, and half of it was vacant, Phillips said. She said saturation of commercial development in the suburbs and re-population of the neighborhood have contributed to Harlem’s rebound. Population has increased 10% to 15% in the last 10 years. Affordable housing construction has “created the atmosphere so we could focus on economic development,” Phillips said.
The most ambitious project to date is Harlem USA, a year-old, 276,000-square-foot retail and entertainment complex, unlike anything ever seen before in Harlem. Never before has big business committed itself to such an extent there. Chase Manhattan Bank, which financed the project, said it was the largest real estate development in any of the federally designated Empowerment Zones around the country, as well as the largest investment by Chase Community Development Corp.
Harlem USA, which opened last February, includes a nine-screen movie theater developed by a company owned by the former basketball star “Magic” Johnson, chain retail stores including Old Navy, HMV, Modell’s Sporting Goods, Jeepers!, and The Disney Store, and a branch of the Chase Manhattan Bank. Since it opened, national chain stores are beginning to open in other commercial strips in Harlem.
Chase made a $47.7 million construction/interim loan for development of this three-story, square-block, $65 million project, located at the corner of 125th Street, the main street of Harlem, and Frederick Douglass Boulevard. The Upper Manhattan Empowerment Zone Development Corp. (UMEZ) lent an additional $11.2 million. Recipients of UMEZ loans also get a $3,000 tax break for each employee who lives within the zone boundaries. The Empire State Development Corporation also provided $3 million.
Building the complex brought 200 construction jobs, and now that it’s open, it employs 500 in full- and part-time jobs. Harlem USA was developed by Grid Properties Inc. and the Gotham Organization in conjunction with Commonwealth Local Development Corp., a local nonprofit community-based economic development corporation. Commonwealth owns the land and has leased it to the development venture.
Although government funds financed only a small portion of Harlem USA, the Rev. Al Sharpton opposed supporting outside-owned corporations when Harlem’s own shopkeepers might be hurt by the new competition. But UMEZ said more than 370 of the new jobs went to Harlem residents.
UMEZ also helps locally owned businesses. The Business Resource and Investment Center, which provides loans between $25,000 to $200,000 to small businesses, receives UMEZ funding. And, UMEZ contends, small businesses alone cannot fill the job vacuum in Harlem.
Harlem USA draws from a market of an estimated 500,000 residents of Upper Manhattan, and more than 1 million tourists who visit the neighborhood annually, said Grid Properties. Harlem residents spent a total of $2.4 billion last year, 70% outside the neighborhood.
The development has fulfilled “unmet demand,” said Drew Greenwald, president of Grid. “Tenants are doing very well.” The occupancy rate is 72%, and the partners are negotiating with electronics and bedding retailers and restaurants to fill the remaining large spaces. Harlem USA will be full in six months, Greenwald predicted.
The private sector is beginning to renovate nearby residences without subsidies, Greenwald said. Redevelopment is having a “dramatic impact on the housing market. People see (Harlem) as a desirable place to live.” Violent crime at Harlem USA has not been a problem, he said.
But if Harlem USA is a drastic change in the face of the neighborhood, the opening of 50,000-square-foot supermarket 10 months earlier may have mattered even more. The project, also on 125th Street, is the only grocery store of its size in East Harlem, and the first large commercial development there for 20 years. The store “signaled and opened the way” for larger Harlem developments such as Harlem USA, said Phillips of Abyssinian Development.
The East Harlem Abyssinian Triangle, the New York City Economic Development Corporation, a unit of the Local Initiatives Support Corp. (LISC), and Pathmark supermarkets joined forces to bring the development into being. Pathmark, the 12th-largest U.S. supermarket chain, has a 25-year lease from a partnership between the Triangle and the city EDC. The site had been a parking lot.
The New York City EDC financed purchase of the site with a 1% loan of $1.5 million. Construction financing included $4 million from Chase, $4 million from the European-American Bank, $2 million from LISC, and $500,000 from Carver Federal Savings Bank. Long-term financing came from mostly the same sources: European-American, the Federal Home Loan Bank of New York, Chase Manhattan’s CDC, LISC, and the Empire State Development Corporation, which lent $1.5 million at 3%. The Retail Initiative, Inc., a LISC unit, invested $2.5 million of equity capital. New York City granted a 22-year property tax exemption.
The store took several years to build, but that was nothing new for Pathmark, which has a history of cooperating with community groups to develop supermarkets in tough neighborhoods, beginning with its Bedford-Stuyvesant store in 1979. Along the way, it has won “many accolades,” says Harvey Gutman, senior vice president for retail development.
“We believe that there is no overriding economic reason that residents in our inner cities should be less well served” by supermarkets than suburbanites, Gutman said. He acknowledged, however, that inner-city development is “exponentially more difficult and risky.”
The store opened in April 1999. It employs 275 workers, more than 75% of them from Harlem itself, Gutman says. As for crime, Gutman says that is among the “challenges we have to face every day, in all of our urban stores.” Pathmark’s stores are entirely in New York, New Jersey, Pennsylvania, and Delaware.
Another new Harlem project is the $60 million Renaissance Plaza, which consists of an 11-story co-op apartment building known as The Renaissance and 60,000 square feet of retail space, including a supermarket. Jerilyn Perine, New York City Housing Preservation and Development (HPD) Commissioner, called The Renaissance “a milestone in the development of affordable housing and home ownership for the residents of Harlem.” More than 4,000 applications were received for the 240 co-op apartments.
The Renaissance Plaza is the largest mixed-use project under the City’s ANCHOR/Partnership Plaza development program, jointly sponsored by HPD and the NYC Housing Partnership. The ANCHOR initiative uses a new and innovative approach to community redevelopment by integrating the rebuilding of commercial corridors with the development of for-sale housing.
Units in The Renaissance are being offered to qualified purchasers whose annual gross incomes are between $25,488 and $140,500, depending on family and apartment size. Applicants who are mobility-impaired, as well as those who are visually- and hearing-impaired, receive preference.
The Renaissance includes 19 different floor plans of from 660 to 1,420 square feet, at prices ranging from $4,056 to $14,637, with monthly fees from $708 to $2,558. Construction began in 1999, and residents are expected to move in this summer.
West 116th Street is one of the commercial corridors selected for the ANCHOR/Partnership Plaza Program. ANCHOR is redeveloping city neighborhoods to bring jobs and retail services to under-served communities.
Other developments are planned. Ground is to be broken soon on the first phase of Harlem Center, a 130,000-square-foot retail project at Malcolm X Boulevard and 125th Street, between Pathmark and Harlem USA. The second phase will be 200,000 square feet of commercial space. “That is something this neighborhood needs,” Phillips said. Harlem has primarily been a “bedroom” community without much white-collar employment.
Conditions in Harlem still have room for improvement, Phillips said. “Some of the issues that people would like to pretend have totally gone away, haven’t,” particularly illicit drugs, she said.