From Grit to Chic to Très Chic
By John Holusha

New York Times
November 23, 2003

On a typical weekday there is a bustle of activity at Chelsea Market, which occupies the ground floor of the old manufacturing building that covers the block between Ninth and 10th Avenues and 15th and 16th Streets. Shoppers browse the food stores to the sweet smell of baked goods, while others enjoy a snack at the tables spotted at strategic corners of the irregularly shaped main-floor corridor.

On the roof, meanwhile, invisible to the shoppers and office workers below, contractors are building a 100,000-square-foot addition to be used as studios and offices by the Food Network, which is to commence operations there about the middle of next year.

Diagonally across Ninth Avenue a new hotel, the Maritime, opened earlier this year in a building that once housed sailors. A couple of blocks to the south, at Ninth Avenue and 13th Street, another hotel, the Gansevoort, is under construction and scheduled to open early next year.

Just to the west, in what was once called the meatpacking district, now the Gansevoort Market Historic District, fashion designers, restaurants and clubs are rapidly replacing meat wholesalers.

The West Chelsea and meatpacking district areas are rapidly being transformed from tired industrial and distribution centers to one of the most hip, lively areas of the city. The influx of media tenants, designers and retailers is raising rent levels and speeding the process of change.  “There is something very New York about all this - the way a neglected industrial neighborhood becomes not just a little gentrified, but suddenly a destination," said Richard Born, one of four partners who own and operate the Maritime Hotel.

Most who know the area say Chelsea Market, with its arcade of two dozen stores selling everything from meat and fish to brownies and wine, has been a key to the redevelopment. At a recent ceremony at the building - a onetime Nabisco cookie factory - Deputy Mayor Daniel L. Doctoroff described the market as "an example of an investment that sparked the transformation" of one of the city's 400 neighborhoods.

One attraction of the market is the freshness of its products. That is because the retail stores there are in many cases offshoots of wholesale companies, whose operations supply the city's restaurants and hotels and are conducted in the back rooms of the 1.9-million-square-foot complex of buildings.

Irwin Cohen, the principal owner and manager of the market since 1995, said another characteristic of the stores is that they are not subsidiaries of some far-distant corporation. "All the tenants are family-owned businesses, some in their second and third generation," he said.

Two Upscale Hotels
Converted Union Hall and a New Tower

The success of Chelsea Market and restaurants, boutiques and clubs in the meatpacking district persuaded the developers of the Hotel Gansevoort to proceed on what had been a parking lot, said Michael Achenbaum, president of the family company.

The retail destinations include Jeffrey, a pioneer on West 14th Street, and, more recently, flagship stores for the designers Stella McCartney and Alexander McQueen. Many of the stores, built in what had been refrigerated meat warehouses, are spare in their presentation, with only a few mannequins standing in bare, shelfless space.

But with shoppers patronizing retailers that Mr. Achenbaum's father, William, described as "minimalist stores with maximum prices," the developers decided to build the Gansevoort as an upscale hotel with nightly room rates starting at $350.

The 13-story building will have 187 guest rooms, including 20 suites starting at $575 a night and a duplex penthouse commanding $3,500 a night. The zinc-colored metal-clad building, designed by the architect Stephen B. Jacobs and the interior designer Andi Pepper, stands in sharp contrast to the low-rise, mostly brick-walled, buildings nearby.

The decision to build a tower on the irregularly shaped lot gives guests views of the city over low buildings nearby and allows for extensive outdoor restaurant and bar operations in good weather, said Michael Achenbaum.

One signature element of the hotel will be the roof, which will include a 45-foot heated outdoor swimming pool, a garden and a loft for social events. These amenities, along with restaurants and a spa, should attract a seven-day-a-week business necessary for the economic success of the project, William Achenbaum said. "We want to be on the cutting edge to attract the sorts of people who made SoHo and TriBeCa," he said.

The association with Mr. Jacobs put the Achenbaums in touch with Henry Kallan, for whom Mr. Jacobs designed the Library Hotel and Hotel Giraffe in New York. That led to an agreement for Mr. Kallen to operate the Gansevoort, with the Achenbaums retaining ownership. "Hotels are a combination of business and real estate, not just an investment," Mr. Kallen said, with all the demands of 24-hour-a-day operation. "Developers need someone to create value in the business."

A couple of blocks up Ninth Avenue, the most prominent feature of the Maritime Hotel, between 16th and 17^th Streets, is the circular windows that dot the facade. In fact, they are portholes, part of the building since it was built in 1966 as a training center and hiring hall for the National Maritime Union.

Each of the 120 standard guest rooms is decorated to look like a cabin on a cruise liner, complete with a five-foot-diameter porthole that can open and close. The old hiring hall in the basement is occupied by two restaurants.

The property has had an up-and-down history. After the sailors departed, occupants included Covenant House, a shelter for teenage runaways, and what was described as a student services center run by the Chinese government. Today, it has been extensively renovated and is being marketed as a highly styled boutique hotel with room rates at $250 a night.

The 12-story building was purchased for $19 million in 2001 by Sean MacPherson and Eric Goode, best known as developers of restaurants and clubs. They were joined by Mr. Born and his partner, Ira Drukier, who have been hotel developers and investors.

"I had been trying to buy the property since the late 1980's," said Mr. Born, who said his earlier plans were
more modest than the current project, whose total cost is about $33 million.

He said the recent improvements in the neighborhood allowed the development of a hotel aimed, in Mr. Born's words, at the "young, hip and cool." He said the change in the area became clear while the interior of the hotel was still under construction. An outdoor plaza serving drinks and snacks was opened and attracted good crowds. "We had people walking their dogs - it's outdoors so you can bring in dogs - come in and have a drink."

He said the approximately 4,000 people who work in the mammoth building next door at 111 Eighth Avenue, many of them for media and graphics companies, represent almost a built-in clientele for the hotels, cafes and restaurants.

Working with an existing building represented less risk, particularly in the uncertain outlook for hotels after the Sept. 11 attack, than new construction. "I had six sites ready to go, but after 9/11, I decided to take a more conservative approach," Mr. Born said.

One of those sites was the land on which the Hotel Gansevoort is being finished. "The Achenbaums had a more swashbuckling attitude, so now they have it on a 99-year lease," Mr. Born said.

In spite of the uncertainties, Mr. Born said, the Maritime has been nearly full since its opening. "I am selling every room, every night," he said.

That has had the effect of pushing room rates from about $200 a night to about $250. "In the hotel business, when you are full you raise rates," he said. "But my partners and I didn't want to push them to $300 and lose our natural market, so we are limiting the increases."

Another newcomer to the neighborhood is Soho House, an arts-oriented private club in a converted warehouse at 29-35 Ninth Avenue in the meatpacking district. To meet city requirements, the property is classified as a hotel. Although the 24 guest rooms are usually occupied by members of the club, which is modeled after one in London, they are at least theoretically available to the public.

Although office space in the area is hardly comparable to the towers of Midtown and Lower Manhattan, demand is increasing for space on the upper floors of industrial buildings, brokers report. Rents range from the mid to high $20's per square foot annually in spaces over the old meat warehouses to the mid $30's in more developed buildings like Chelsea Market and 111 Eighth Avenue, they add.

"Clothing designers are moving into the area, and we had a law firm that specializes in working with creative people," said Jodi Roberts, an associate with CB Richard Ellis, the brokerage and services company. One noteworthy relocation is the auction house Phillips, de Pury & Luxembourg, which moved from 57th Street to 450 West 15th Street, occupying what Matthew Bergey of CB Richard Ellis said is 30,000 square feet of space.

Food Network Studio
Installing Modern Box on Aging Structures

One of the biggest single deals in the area is the Food Network project at Chelsea Market, whose formal address is 75 Ninth Avenue. In a sense it represents a return to a building whose major theme is food.

The cable channel had originally signed a lease for 8,000 square feet in what had been a loading dock facing 10^th Avenue for a studio and kitchen and 18,000 square feet in the basement for production and technical operations. But it never moved in, and the space is available for sublet.

"After much searching, Food Network came beck to Chelsea Market," said Samuel Clark III, an executive director of Cushman & Wakefield, the brokerage and services company.

He said the location was a "natural fit" for a media company since New York 1, the cable channel, and Oxygen Media, the cable television and Internet network, are already in the building.

"We wanted to consolidate in one location," said Peter Crowley, vice president for property development for Scripps Networks, which owns the Food Network along with the Home and Garden Television and Fine Living cable networks. Food Network now has a studio on 52nd Street and 10th Avenue and offices at 1180 Avenue of the Americas.

"There is a natural affinity between the market and the station, and Irwin was able to put together a program that met our needs," Mr. Crowley said. Earlier, Food Network officials had said they planned to take a camera along the central aisle of the market to photograph food preparation operations. Now, Mr. Crowley said, Mr. Cohen has promised to install cabling in the building so that cameras on the ground floor can be connected to studios on the roof.

Building the studio on the top of the old cookie factory - the first Oreo was produced there in 1912 - was far from simple, said Jeff J. Vandeberg, the architect for the project. Although it looks like one structure, the market is actually made up of 17 buildings built in the 1890's to the 1930's. Many are supported by wooden columns, rather than steel.

Mr. Vandeberg said the 100-foot-by-85-foot box that will contain the studio and transmission facilities was placed over an atrium between buildings. To avoid adding burdens to the wood-supported floors below, the addition is built on a truss that spreads the loads to the two-foot-thick brick walls of the buildings. "It was not easy to put a modern box on this old structure," Mr. Vandeberg said. "It was an intricate job of weaving the old plus the new."

111 Eighth Avenue
An Influx of Offices in a Hulking Structure

Food Network is not the only media company moving into the neighborhood. DoubleClick, the Internet advertising and monitoring company, has leased 76,000 square feet on the 10th floor at 111 Eighth Avenue, a onetime Port Authority building. The company, which downsized after the dot-com debacle, is leaving space at 450 West 33rd Street.

And Deutsch Advertising is increasing the amount of space it occupies in the building to 130,000 square feet from 110,000.

Paul E. Pariser, a partner in Taconic Investment Partners, which owns the 2.9-million-square-foot building, said it had made an almost complete transition from industrial uses to offices since Taconic became only the third owner in January 1998. "We have had an 80 percent turnover of tenants since taking over," he said.

Although telecommunications tenants, which use most of their space for electronic equipment, occupy 35 percent of the space in the hulking structure, the amenities of the area are attracting more human tenants. "Chelsea Market is a tremendous amenity for us," Mr. Pariser said. Banana Republic now occupies two floors in the building rather than the single floor it had when it opened, "and there is a Starbucks at 15th Street and Ninth Avenue."

The "gentrification of 14th Street," he said, has resulted in a connection between West Chelsea and the long established community in western Greenwich Village.

The success of the clothing store Jeffrey, which opened in the summer of 1999 in an old moving and storage building at the western end of 14th Street, began attracting retailers to an area dominated by refrigerated warehouses and roll-up metal gates, said Andrew S. Goldberg, an executive vice president of CB Richard Ellis.

"Retail was the last to get here, after the restaurants and clubs started drawing people both day and night," he said. The rents in the area were lower than SoHo, he said, where space on side streets are typically $60 to $200 a square foot annually, while they can hit $300 a square foot on streets like Spring and Prince.

Michael Achenbaum said ground floor rents in the meatpacking district were typically $10 to $15 a square
foot before the influx from the outside. Now they are $60 to $100 a square foot, he said.

Mr. Goldberg agreed that rents for retail space have been rising in the area, even though they are still generally lower than SoHo. "Post-Jeffrey rents were in the $20 to $30 range, and they quickly doubled to $40 to $60 a square foot," he said. "Now they are at about $80 a square foot on West 14th Street and the most recent deals have been approaching $100 a square foot."

Unlike SoHo, the meatpacking district is unlikely to change completely, Mr. Goldberg said. For one thing, he said, some meat wholesalers own their buildings and so they will not be driven out by rising rents if they choose to stay.

And the location tends to favor some continued industrial use. "It is so close to the West Side Highway," Mr. Goldberg said, "that there will probably be something of a wholesale component in the area."