Brooklyn’s Business Boom: Office

Brooklyn is one of the epicenters of the new, youth-driven economy. Employment, and the number of employed and self-employed workers, have soared, but the number of poor people living in the borough has also increased, and its average income remains far below the U.S. average.

Brooklyn’s economic base has long consisted of two things, commuting to Manhattan and bringing back money to be spent in the local consumer economy, and something else. That something else was once agriculture, and then manufacturing and the city’s seaport. With the city’s economic collapse in the 1970s, that something else was largely public assistance and government-funded health care and social services, which dominated the borough’s employment. The borough even lost a great deal of its local consumer-driven business activity, due to its falling relative income and the custom of its better off residents choosing to drive elsewhere to go shopping. Today, however, there is something of a turnaround, both in the economic base in the consumer economy. But where is it concentrated, and why? I had my daughter create some maps of data by zip code to find out. This post is about office-based businesses, and another will follow.

These posts are a follow-up to one written a year and a half ago, showing where people working in Brooklyn are concentrated, and where their numbers increased from 1980 to 2010.

https://larrylittlefield.wordpress.com/2016/01/12/the-geography-of-brooklyn-employment-growth/

It is based on Census Bureau data by census tract tabulated not by place of residence, but rather by place of work.

This post is based on Zip Business Patterns data on the number of business establishments in different size classes by sector. That data, for 2005 and 2015, may be found here.

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To crunch the data down enough to be shown in a map, I summarized it into two size classes, businesses with 1 to 19 employees, called “small,” and those with 20 or more employees, called “large.” But businesses with 20 or more employees don’t have to be physically large; they may just be open a large number of hours. A small but popular restaurant serving breakfast, lunch and dinner into the evening seven days per week may have that many workers and more, even if not all were working at the same time. Zip Business Patterns does not include businesses with zero employees — individual self-employed people working for themselves.

I also put the sectoral data into three broad categories for mapping. The office-based sectors, the subject of this post, include Information, Finance and Insurance, Professional, Science and Technical Services, Administrative and Support Services, and Management of Companies (headquarters). The industrial sectors include Manufacturing, Construction, Wholesale Trade, Utilities, and Transportation and Warehousing. The Consumer-Based sectors are Retail Trade; Accommodation and Food Services; Arts, Entertainment and Recreation; and Other Services (such as beauty parlors and dry cleaners). This is based on the type of real estate each sector is most likely to occupy, although those distinctions are becoming blurred. The institutional private Education and Health and Social Assistance sectors, dominant in Brooklyn’s economy, are not the subject of these posts and are not included in the maps. Zip Business Patterns does not include Government.

Finally, to understand which places I am writing about when I discuss the maps, this map shows Brooklyn zip codes and streets.

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And this zip code shows one version of Brooklyn’s neighborhood names.

Brooklyn Neighborhood Map

First the office sector.

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The data shows that one-fifth of all the office-based businesses with 20 or more employees in 2015, a total of 114 of them, were located in zip code 11201, which includes Downtown Brooklyn, Fulton Ferry/Dumbo and Brooklyn Heights.  That is up from 92 in 2005.

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Back when I worked at City Planning, Downtown Brooklyn, known as New York City’s third largest business district, was about the same size and had about the business mix as one would find in most downtowns in primarily-suburban America. Government and social service agencies. Law offices, located near the courts. And the long-time headquarters of some utilities and local banks.

The city up-zoned the area and subsidized the development of Metrotech to try to get the back offices of major financial firms to move there, instead of to New Jersey. But the number of large establishments in the Finance and Insurance sector fell from 24 in 2005 to 15 in 2015, while the number in the Information sector, including telecommunications, publishing, broadcasting, and motion picture and sound recording, rose from 13 to 24, the number in Professional, Scientific, and Technical Services increased from 27 to 39, and the number in Administrative and Support Services – those back offices – edged up from 22 to 25.

Four additional zip codes collectively also accounted for one-fifth of the borough’s large office-based establishments. One was 11217, including another part of Downtown Brooklyn, the area around the Brooklyn Academy of Music, the eastern edge of the Atlantic Terminal redevelopment, and the far northern edge of Park Slope. The number of large office-based establishments rose from 12 in 2005 to 19 in 2015 there.   Zip codes 11222 in Greenpoint had 18 such establishments in 2015, down from 22 in 2005, and 11211 in Williamsburg had 35 in 2015, down from 38.

Meanwhile 11219, in Borough Park, had 22 office-based establishments with 20 or more employees in 2015, up from 21 in 2005. The large size and dynamism of the Borough Park economy, as you will see in this post and next, is an untold but interesting story in Brooklyn.

On the flip side the number of office-based establishments with 20 or more employees fell in zip code 11215, the epicenter of “yuppie” Brooklyn in Park Slope, and in zip code 11226, Downtown Flatbush – once a rival to Downtown Brooklyn. Neither place has a concentration of such establishments. In each case shrinking employment in bank branches and telecommunications central offices seems to be the reason.

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A different picture emerges when it comes to office-based establishments with 1 to 19 employees. Once again 11201 in Downtown Brooklyn has the most with 850, about one-fifth of the borough total. Of these 555 in are in Professional Scientific and Technical Services, up from 331 a decade earlier, and 138 were in Information, up from 75.

But coming in second with 595 office-based establishments with 1 to 19 employees, also about one-fifth of the borough total, was 11235, a zipcode located in Sheepshead Bay, Brighton Beach and Manhattan Beach.   When I think of office-based businesses in that zip code I think of the movie Glengarry Glen Ross, which as filmed there. But most of the zip code’s office-based establishments, and most of the growth, was in Professional, Scientific, and Technical Services with 401 establishments in 2015, up from 255 in 2005.

Four more zip codes also account for about one-fifth of the borough’s small office-based establishments – 11211 in Williamsburg, with 492 in 2015 up from 271 in 2005. Zip code 11215 in Park Slope and part of Windsor Terrace, with 473 up from 272. Zip code 11219, in the heart of Borough Park, with 423 in 2015, up from 285 in 2005. And zip code 11204 on in Parkville, part of Borough Park and part of Bensonhurst, with 384 establishments up from 297.

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Virtually every area of Brooklyn added small office-based establishments from 2005 to 2015. Williamsburg, Downtown Brooklyn, Park Slope and Sheepshead Bay/Brighton Beach/Manhattan Beach together accounted for one-fifth of the increase.

What explains the pattern of office-based businesses and their growth in Brooklyn? Part of it is geographic. Downtown Brooklyn and Williamsburg are located near Manhattan, where the vast majority of New York City’s office-based activity – indeed its business activity – takes place. Like Manhattan, but to a lesser extent, centrally located businesses in Brooklyn have access to a large number of workers in the city and the suburbs via mass transit. Areas further out have access to fewer workers within a reasonable commute. But Brooklyn’s geography has not changed over the years, while its appeal to office-based businesses has.

There has been a revolution in office location over the past 20 years. From the 1960s to the mid-1990s, office-based business location was driven primarily by the suburban residential location preferences of top executives, and the desire to flee declining central cities. Many large firms moved to fortress-like suburban office campuses, and many other businesses moved to office-buildings off the highways nearby. The location of the workforce was never a consideration. With Baby Boomers, former housewives and immigrants flooding into the labor force, it was assumed that workers would follow their jobs to wherever businesses decided to place them.

But today, with the Baby Boomers retiring, unemployment dropping, and businesses unable or unwilling to raise wages to poach workers from other firms, access to labor – especially college-educated, talented and/or creative labor – is driving location decisions. The bovine herd of businesses that stampeded out of large central cities are stampeding back in, obsessed with hiring educated young millennials, whose location preferences have become increasingly urban.   Because that’s what the other CEO at your golf course is doing, too. Some maps of American Community survey data show where these workers may be.

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Employed workers are located all over Brooklyn. If anything there are more of them further out in the borough where population density has been rising due to immigration, and less of the land is occupied by non-residential buildings. Flatbush, zipcode 11226, has a large concentration of employed workers. But the largest such concentration is in Williamsburg, with about one fifth of the borough’s workers in Tract 11211 alone, plus a tract on the East River that was split off later.

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What office-based businesses are more interested in, however, is the young workers they need to get – not the older workers they already have. The data shows that one-fifth or Brooklyn’s workers ages 25 to 34 are located in tract 11211 and 11206, Williamsburg into northern Bedford Stuyvesant, tract 11226, Flatbush, and tract 11220, Sunset Park.

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What they are specifically interested in, moreover, is college-educated workers age 25 to 34. One fifth of Brooklyn’s workers in this category live in two zip codes – 11211 in Williamsburg, where there were an average of 17,080 during the years from 2011 to 2015, and 11215 in Park Slope and part of Windsor Terrace, where there were 14,380. Another fifth are in four zip codes: 12,613 in zipcode 11201, Downtown Brooklyn/Brooklyn Heights; 10,504 in zipcode 11238, in Prospect Heights and Fort Greene; 9,908 in zipcode 12222 in Greenpoint; and 8,168 in zip code 11215, in part of Downtown Brooklyn, Atlantic Terminal, and Fort Greene. All near Manhattan.

One theory about what might happen in this era of underpaid but scarce labor is that businesses will be forced to turn to types of workers it had shunned when young, healthy, college-educated workers were plentiful at low wages. And that being able to train, retain and get productive use out of such workers will become a key business advantage.

These include aging workers, who seek to remain active as their health, energy and productivity slowly decline, and may be attracted by a diminished schedule. And typically unreliable teenagers, who might benefit from actually being relied on by somebody and fired if they don’t show up on time. Labor force participation for those groups has risen recently, after having fallen over the decades.

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Even if you look at all college-educated workers ages 25 and up, however, about one-fifth of the Brooklyn total resides in just three zip codes – 11211 in Williamsburg with 29,050 such workers, 11201 in Downtown Brooklyn and Brooklyn Heights with 30,800, and 11215 in Park Slope/Windsor Terrace with 38,195.

Back when I started analyzing this sort of data on Brooklyn, Brooklyn Heights and Park Slope stood out as the only areas of Brooklyn that were attracting in-migrants from the rest of the U.S.   The only people moving to other areas of the borough were immigrants. The relatively large population of college-educated workers age 35 and over in 11201 and 11215 is a legacy of those days. That the number isn’t larger is due to the fact that many Baby Boomers moved (back) to the suburbs when their children reached school age, or middle school age, to places such as Maplewood, New Jersey.

Five more zip codes accounting for the next fifth of total college educated workers age 35 and over include four in neighborhoods further out – 11209 in Bay Ridge, 11230 in Midwood and Parkville, 11229 in Sheepshead Bay and 11235 in Sheepshead Bay, Brighton Beach and Manhattan Beach. These are more suburban areas of the borough where college-educated people who grew up there were once concentrated. But not Borough Park, despite its large number of office-based business establishments.

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Finally, if one maps the number of workers in Management, Business, Science and Arts occupations, one finds the same set of three centrally located zip codes account for one-fifth of those living in the entire borough in the year 2015. There were 30,200 such workers living in zip code 11215, Park Slope, 26,725 in zip code 11211 in Williamsburg, and 23,404 in zipcode 11201 in Downtown Brooklyn and Brooklyn Heights.

Another fifth live in zip codes 11238 in Prospect Heights/Fort Greene, 11234 in Marine Park, Mill Basin Bergen Beach, and Flatlands, 11209 in Bay Ridge, 11236 in Canarsie, and 11217 in Downtown/Atlantic Terminal/For Greene. These are a mix of areas close to Manhattan, with a relatively short subway commute to Downtown and Midtown, and more “suburban” areas further out on the borough’s southern rim.

Borough Park, and Sheepshead Bay/Brighton Beach/Manhattan Beach, do not have as much of a concentration of resident-workers in these occupations.

The large number of office-based businesses in these areas, and, in the case of Sheepshead Bay/Brighton Beach/Manhattan Beach, the significant increase in small office-based businesses from 2005 to 2015, thus cannot be explained by proximity to Manhattan, transit access, or an influx of young college graduates. They have their own special sauce for business. In the case of Borough Park, that includes businesses outside the office-based sectors, as will be seen in the next post.

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