Manufacturing Space in Brooklyn Retools for the Modern Tenant The atrium of the Brooklyn Army Terminal, which is 93 percent occupied and has rates from $6 to $12 a square foot. The hulking industrial buildings that line Sunset Park's waterfront once bustled with manufacturing and military activity. Elvis Presley deployed to Germany from the Brooklyn Army Terminal in 1958, one of three million troops to pass through the Cass Gilbert-designed building. The area was once so busy that it had its own rail line and police and fire departments. Today, many of these historic buildings, with about 15 million square feet of light manufacturing space in Brooklyn, are antiquated and struggling to stay relevant. Built at the turn of the last century, many of them lack basic amenities like central air-conditioning and automated elevators. As New York City bleeds manufacturing jobs to cheaper markets, persuading companies to stay is, at best, difficult. But the city, which owns more than one-third of the space, and private developers are revamping these properties to appeal to a more nimble manufacturing tenant. And in doing so, the buildings are entering a new era that may ultimately benefit this working-class neighborhood. Three of the area's biggest properties are undergoing makeovers: Industry City, a rambling 6.5-million-square-foot complex off the Gowanus Expressway, which has been reaching out to small food manufacturers to capture some of the energy of the Brooklyn artisanal food scene; Federal Building No. 2, now renamed Liberty View Industrial Plaza, which is in the midst of a $40 million renovation and may soon open a Bed Bath & Beyond; and the city-owned Brooklyn Army Terminal. It's pretty exciting stuff. We're definitely seeing some improvements," said David D. Meade, executive director of the Southwest Brooklyn Industrial Development Corporation, a local economic development group. Industry City is emblematic of the plight of manufacturing here - and its potential. Many of the 16 buildings in the complex, which dates to 1895, have fallen into disrepair. "After dark, it's like being in a Batman movie because the buildings are so old and massive and decayed," said Jennie Dundas, co-owner of Blue Marble ice cream, which moved into a 3,000-square-foot manufacturing space in Industry City in December. Only 66 percent of the property was occupied in January 2012, according to a loan analysis by Morningstar. About 2,500 people work at Industry City, according to the owners. By contrast, when Harry Helmsley owned Industry City in the 1970s, Topps Candy, makers of Bazooka bubble gum and baseball trading cards, had its headquarters there and the complex was 95 percent occupied, with 20,000 workers. Tenants said that until the current owners, Rubin Schron and Abraham Fruchthandler, began renovations a year ago, windows swung open, roofs leaked, hallways filled with rainwater and trash went uncollected. In December 2010, Schron and Fruchthandler failed to make payments on a $300 million loan on the property, according to the Morningstar analysis. "I really remember it being in trouble," said Jean-François Bonnet, owner of Tumbador Chocolates, which has been a tenant since 2005 and provides sweets to places like the Pierre and the Mandarin Oriental. But Industry City is turning a corner. In April, the owners restructured their loan, reducing their debt and lowering their monthly payments. As part of the arrangement, they invested $30 million in the property, according to the Morningstar analysis. They plan to repave streets, upgrade buildings, improve infrastructure and modernize elevators. "The area's character is shifting from outdated to industrial chic," Bruce Federman, director of real estate at Industry City, said in a prepared statement. The owners have recently negotiated leases with Brooklyn-based niche food manufacturers including Blue Marble, Industry City Distillery, Colson Bakery and Nunu Chocolates. In September 2011, Industry City Distillery, a new vodka producer, moved into a 6,500-square-foot space. One of the location's draws was access to the roof, where the company hopes to build a greenhouse. "The infrastructure support that Industry City offered was great," said Zachary A. Bruner, a machinist and fabricator at the distillery. But redevelopment faces deeper challenges, as manufacturing's decline has accelerated in the last decade. The vacancy rate for industrial space in Sunset Park has hovered around 8 percent since 2005. It was just 3.1 percent in 2002, and less than 1 percent in 1997, according to data from the CoStar Group, a real estate information company. An article and a picture caption in the Square Feet pages on Wednesday about the redevelopment of industrial spaces near the waterfront in Sunset Park, Brooklyn, misstated the amount that the New York City Economic Development Corporation recently spent to upgrade the Brooklyn Army Terminal. The agency spent $4.2 million a year ago, not $1.2 million.