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Deals Lure Tech Companies To Brooklyn Neighborhood

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December 10, 2000, Section 1, Page 59Buy Reprints
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In the nine months since the city began a program called Digital NYC to market tax incentives to technology companies interested in moving to parts of the city outside Silicon Alley, it has had notable success in one area: the Brooklyn waterfront neighborhood known as Dumbo, where it has lured 11 companies that have brought 225 jobs and leased 70,000 square feet.

To some, Dumbo provides a road map for how the Digital NYC initiative can be replicated in other parts of the city.

But at a time when city officials are pushing hard to make Manhattan north of 96th Street and the other boroughs attractive alternatives to the New Jersey waterfront, it appears they have been unable, at least so far, to replicate the success they have had in Dumbo in six other technology districts in Brooklyn, Staten Island, Harlem and Queens.

So far, in four of those districts -- the Brooklyn Navy Yard, 125th Street in Harlem, Long Island City in Queens and the so-called Silicon Harbor in Red Hook, Brooklyn -- no leases have been signed. At two others, the Brooklyn Information Technology Center in Sunset Park and the Staten Island High Urban Bandwidth area in St. George, only three companies have signed on, for a total of 20,000 square feet.

City officials point to positives, like the fact that 10 leases are being negotiated in some districts, and that landlords in these districts have committed about two million square feet of space that will be wired and available soon. And some of these areas are no more remote, despite the perception, than Manhattan's far West Side, which has attracted dozens of Internet companies, real estate brokers say.

But the brokers say that for a range of reasons, from safety concerns to alarm over losing employees and a lack of amenities, many technology companies remain reluctant to look outside Silicon Alley, which runs from the Flatiron District south to Wall Street.

''Its all about perception,'' said Andrew Peretz, a director at Insignia/ESG, the commercial real estate firm who has taken technology clients to look at sites in Queens.

''Long Island City may be closer to Grand Central station than downtown is, but there is still a perception of going over that river and entering a separate culture that is not New York City,'' he said. ''These companies are driven by young people who want things to be sexy, fun.''

In the mid-1990's, the Giuliani administration helped fund the so-called smart-wiring of buildings and offered targeted tax cuts to businesses that moved to Lower Manhattan, moves that were seen as important in the development of Silicon Alley.

''New York City has been able to encourage the growth of these dot-coms, now one of the questions being asked is will they be able to retain them,'' said Marc M. Goloven, a senior regional economist at Chase Manhattan Bank. ''The question of when a new media company moves, does it have to move outside of New York City? Can the outer boroughs make themselves attractive compared to Hudson County in New Jersey?''

To address that issue, the city began Digital NYC, hoping that it would alleviate overcrowding in Lower Manhattan, and at the same time spread the dot-com boom to other parts of the city. The idea has shifted a bit since dot-coms began experiencing financial problems earlier this year, but city officials are convinced that the shakeout will only encourage more companies to flee high-dollar leases.

Michael G. Carey, the president of the New York City Economic Development Corporation, calls Dumbo ''a success from the standpoint of our expectations since we started the program nine months ago.''

The city has teamed up with local economic development corporations, giving them money for marketing to find tenants and landlords willing to install powerful high-speed Internet connections.

The leases are often half what companies would pay in Silicon Alley, and in July the city began a program that provides tax refunds of $3,000 per employee relocated from Manhattan's most desirable neighborhoods and from outside the city.

''The economic benefits are fantastic,'' said Robert Eisenberg, corporate managing director at Julien J. Studley, who has visited some of the areas with technology clients. ''But Manhattan is where their employees want to work, and there are perceived transportation issues, safety issues and a lack of amenities.''

Some city officials have expressed concern that Dumbo -- which stands for Down Under the Manhattan Bridge Overpass -- has some advantages that the other technology districts do not. Among those are its proximity to City Hall just two subway stops away, its emerging art community and the fact that developers were working on technology projects there before the Digital NYC program.

Still, many people, like Charles Millard, a former president of the New York City Economic Development Corporation, believe that ''all they need is somebody to make the first move'' for some of the new districts to become popular. ''When somebody noteworthy from Silicon Alley goes out that is when you will see this programs take off.''

A version of this article appears in print on  , Section 1, Page 59 of the National edition with the headline: Deals Lure Tech Companies To Brooklyn Neighborhood. Order Reprints | Today’s Paper | Subscribe

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