Silicon Alley has certainly built a mega hub for tech entrepreneurs, but so often it is easy to forget that Manhattan is not the only “New York.” The fight for space in Manhattan is reaching capacity, and the outer boroughs have shown a lot of promise for nurturing a successful business. While in office, Mayor Bloomberg spoke of his faith in the growth of the outer boroughs and suggested that there is even more growth to come. Now, having a mayor who hails from Brooklyn, the other boroughs have grabbed the city’s attention more than ever.
So What’s All the Fuss About the Boroughs?
Let’s take Dumbo for example, the neighborhood just across the river is home to 25 percent of New York’s tech firms, such as shining star Etsy. The founders realized a majority of their workforce lived in Brooklyn and because a lot of artistic people surround the area, collaboration can happen even when out for a night of drinks. The community is tightknit and vibrant. Dumbo is the Brooklyn hub, but others are spreading out to find new pockets of potential such as Kickstarter in Greenpoint. Heading up to Queens, companies such as Uber, Aereo and KeyMe need more physical space and are carving a nook into long forgotten Long Island City. All around, tech startups are flocking to New York and choosing the boroughs as their best bet. Looking to the future, areas surrounding Roosevelt Island, the Cornell Tech campus, and even deeper into Queens and Brooklyn can all be developed. With a little motivation, the rise could be sooner than we think.
Yet, if these areas are still only developing, why would companies want to move their business to the outer boroughs? The City has received a lot of criticism for neglecting the outer boroughs and stifling city-wide economic growth. However, the scope and range of abatement incentives offered by the City are now targeted to change this. These incentives, some old and some new, have been set in place to promote living, working and playing in the outer boroughs. A little research can lead to huge advantages for your growing business. Here are some reasons to give the outer boroughs a more in-depth look for your business.
Inspirations from the Lower Manhattan Project
In 1995, in an effort to restore Lower Manhattan, the City utilized the Lower Manhattan Restoration Plan, which offered incentives to landlords and tenants to lift the area, which consisted of many vacant, old Class B buildings. Among the incentives was a real estate tax abatement for buildings built before 1975. Tenants were given benefits through rent reduction and lower energy costs. As a result, many businesses moved to Lower Manhattan, and since September 11 even more businesses are relocating and regenerating the economy. The program worked so well, the city is now focusing on the outer boroughs as prime locations for business and development growth. Business in the BoroughsRecently, the Relocation Employment Assistance Program (REAP) was probably the most exciting incentive plan available to businesses moving to the outer boroughs. The program ran from 2003 to 2013 and provided an annual tax credit of $3,000 per qualified employee in a company of up to 100 employees, for 12 years. To reap the REAP benefits, an eligible business had to relocate from outside NYC or from below 96th Street in Manhattan to an eligible area. These areas consisted of anywhere in the four outer boroughs, and above 96th street in Harlem. This meant huge savings for businesses. For example, a 100 person firm could save up to $300,000 a year for 12 years. You do the math. For some startups, this was the way to stay afloat.In regards to energy, Business Incentive Rate (BIR) is an energy discount program, designed to encourage economic growth in manufacturing and industrial sectors by discounting ConEd’s electric delivery charges. Businesses that move into industrial buildings, new construction, or vacant commercial buildings may apply. The incentive reduces the electricity bill up to 35 percent and has a term of 5 to 10 years. This program is for the outer boroughs, but also includes Manhattan.
Saving on RentThe first step in relocating to the boroughs is finding a place to set up shop. Under Mayor Bloomberg, the city added several incentives for tenants and renters to save tax money.The New York City Commercial Expansion Program (CEP) provides credits for tenants signing qualified leases in the outer boroughs, or north of 96th Street, for at least 3 or 5 years. The rented space must be commercial offices or industrial spaces. The rebate benefit is worth up to $10 per square foot for up to 5 years for commercial tenants and 10 years for industrial or manufacturing tenants. Unfortunately, retail businesses do not apply for the CEP.The Industrial and Commercial Abatement Program (ICAP) is a program that allows building owners in the outer boroughs, or in qualified areas of northern Manhattan, to receive a 15 or 25 year real estate property tax refund in exchange for substantial renovations to commercial or industrial buildings. The rules are quite strict to apply and a preliminary application must be submitted first before the commencement of building. However, if one qualifies for the abatement, the costs of savings would be substantial. Visit the nyc.gov website for a more in depth look at the regulations.The Energy Cost Savings Program (ECSP) has recently expired (June, 2013) but an extension is pending. The program targeted businesses that relocated to the outer boroughs, or businesses already existing in the boroughs that were making substantial building improvements. It enabled these businesses to receive up to 12 years of electricity and gas discounts worth up to 45% of the transmission portion of their utility bills. A total savings was approximately 15% of the total utility bills.The Future of Transportation
For better transportation in NYC there are always ideas in the works, such as the Regional Plan Association’s proposed Triboro Overground. The plan would better connect Brooklyn, Queens, and the Bronx with an over-ground track on existing rights-of-way. The inter-borough connectivity could contribute greatly to creating a new hub for businesses without the necessity of transporting through Manhattan. If the city is offering incentives, planning new transportation, and promoting the culture and neighborhoods of the outer boroughs, what more reasons do you need to start up and stay? For further information on outer borough development incentives, please visit the New York Grant Company. Since 2001, the company has helped thousands of businesses save over $500 million in benefits. The NYC Government website also provides specific details and applications processes.