Food-biz subsidies, tax breaks pay off for Bronx

CRAIN'S New York Business

July 29, 2013

Online grocer FreshDirect may be the highest-profile business relocating to the Bronx, but it will have plenty of company when it finally opens its headquarters there in 2016. The borough has become a magnet for food businesses, which is helping to boost growth and economic development.

The Bronx has long been home to the Hunts Point Food Distribution Center, the largest in the world, selling $5 billion worth of meat, fish and produce annually. But the food businesses outside the center are now proliferating, generating substantial private and public investment and thousands of jobs in a borough known for its high crime and poverty statistics. Over the next couple of years, at least a dozen businesses will move to the borough or expand their existing facilities.

“We wouldn’t have invested $65 million in the South Bronx if we didn’t plan on growing more,” said Simon Bergson, chief executive of Manhattan Beer Distributors, which delivers Corona and other big-name brands to metropolitan-area grocers, bars and restaurants.

His company had already expanded in May to a 19-acre facility just a few hundred yards away from its former home in Hunts Point. And his old digs will soon have a new tenant: Fairway Market, which is building a 200,000-square-foot warehouse and bakery.

“We’ll do some baking and cooking and centralize all of our produce buying up there,” said Howard Glickberg, vice chairman of development, whose family founded the company. “It gives our newer stores a little more retail space.”

Fairway and others are taking advantage of loans and city tax incentives aimed at luring businesses to the borough. FreshDirect, with 2,400 employees, was offered $127 million. It has promised to hire an additional 1,000 workers.

“We were the last borough with big spaces at good price points,” said Marlene Cintron, president of the Bronx Overall Economic Development Corp., which has doled out $18.5 million in below-market loans to 24 food companies since 2009.

The city is a substantial landlord in the borough, where the city’s Economic Development Corp. controls the 329-acre distribution center in Hunts Point and other lots on the peninsula. The agency has begun to free up some of that land to encourage more food companies to develop it.

“We believe strongly in growing the food cluster there,” said Jennifer Sun, senior vice president of development for the EDC. In May, the agency issued a request for proposals to develop nine acres in Hunts Point. The city owns an additional 20 acres of undeveloped land in the area.

Though hospitals and educational institutions remain the biggest employers in the Bronx, food-sector jobs are the fastest-growing. According to the the EDC, food-related wholesale jobs in the borough grew 11.5% from 2008 to 2011, compared with a 6.8% increase in health care jobs over the same period. Local academic institutions are taking notice as they prepare their students to enter the workforce. Hostos Community College of the South Bronx, known for its nursing programs, is considering a food-studies curriculum for the first time in its 45-year history.

Making beer, moving olives

“I want to make sure that students who attend public institutions like ours have an equal opportunity to grow in this field, to articulate city policy on food and to be part of the discussion,” said Félix Matos Rodriguez, president of the college. He hired Karp Resources, a food consulting firm, to vet and develop the curriculum.

Among the new employers generating jobs is the borough’s first brewery in more than 50 years. By the end of this year, Bronx Brewery expects to begin producing beer in Port Morris. (It has been brewing in Connecticut for the past two years.) Co-founder Chris Gallant recently acquired a space and is ready to build. The brewery will also open a taproom, a rare amenity for locals.

Another newcomer, Krinos Foods of Long Island City, Queens, distributes and makes such items as olives, caviar and cheese. It is moving into a 100,000-square-foot building next year in East Tremont, bringing just under 100 jobs.

The South Bronx is also attracting developers whose plans include retail stores, something that is lacking in this largely industrial area.

Eataly-style market

Steven Smith, for example, owns 16 acres of undeveloped land along the East River in the Oak Point freight yard, which had been a garbage dump that his firm, Oak Point Property, cleaned up. He originally owned another 12 acres north of the property. In 2010, he sold that parcel to Jetro, a food wholesaler that sells to restaurants and grocery stores, and then developed it into Jetro’s New York headquarters.

His plan for the 16-acre parcel is to build an Oak Point Fresh Food Campus, a four-story building that would include a market modeled after the popular European-style Eataly on Fifth Avenue, as well as a 75,000-square-foot rooftop greenhouse. “There are a lot of people who work in this area, and the choices of places to go are limited to hot dog and hamburger places,” said Mr. Smith.

The owners of Dufour Pastry Kitchens Inc., who moved their firm to Port Morris from the meatpacking district six years ago, couldn’t agree more about the dearth of basic retail stores and services.

“Coming from Manhattan, it took a while for us to get used to this area,” said Judi Arnold, co-owner of the business, which supplies restaurants and gourmet markets with hors d’oeuvres and puff-pastry dough. “Within a two-block radius of us, there is just one luncheonette, and there are no banks.”

But Ms. Arnold is hopeful that the Bronx Brewery, which is opening a few blocks from her bakery, will spark more retail development.

Indeed, there are signs that some of that is already happening. According to state Comptroller Thomas DiNapoli, the number of restaurants in the South Bronx nearly doubled from 2000 to 2011, including Havana Café on East Tremont Ave. in Schuylerville. Its owners are opening more eateries and would like to expand to the industrial hub at Hunts Point. (See “Eatery morphs to exemplar,” Crain’s, July 22.) “I’d like to set up a food court that reflects all the food that’s coming out of the markets,” said Ruben Rodriguez, co-owner of Havana Café, which was recognized in the prestigious Michelin New York City restaurant guide.

“We are growing and building a footprint in the borough,” he said, “and we want to go into areas that are a little more depressed, where there are opportunities to grow.”

Room to grow

The Bronx is one of the last bastions of the city where food manufacturers and distributors can set up shop and expand.

FreshDirect: The online grocer is moving its headquarters to the Bronx, bringing 2,400 jobs and promising 1,000 more over the next decade in exchange for $127 million in tax breaks and other incentives from the city and state.

Bronx Brewery: The borough’s first brewery in 50 years will bring a taproom to a neighborhood lacking basic amenities.

Fairway Bakery: The growing supermarket chain is setting up a bakery in the Bronx and consolidating its produce purchasing, adding about 100 jobs.

Manhattan Beer Distributors: One of the largest beer distributors in the area, with 1,400 employees, invested $65 million to move into bigger headquarters on 19 acres of land.

Oak Point Property: A developer is marketing 16 acres to food retailers and wholesalers on land that had been used as a landfill. Potential tenants include an Eataly-style retail market and a farmers’ wholesale distribution center, plus rooftop greenhouse.

The Chefs’ Warehouse: The specialty food distributor is investing up to $20 million in building a new facility, adding 100 jobs.

Hunts Point Food Distribution Center: The world’s largest wholesale food market sits on 329 acres and sells $5 billion worth of meat, fish and produce annually. It is an economic engine of the Bronx’s food economy—and it’s growing as the city markets new parcels of land.

 

http://www.crainsnewyork.com/article/20130728/ECONOMY/307289986

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