SoHo developer flouting rules to convert space to retail, residents say

Developers are applying for a special permit that would allow for retail on the lower floors of 363 Lafayette St. 
Developers are applying for a special permit that would allow for retail on the lower floors of 363 Lafayette St.  Photo Credit: NYPD via Twitter

Placing retail on the ground-floor of office buildings — a classic look in SoHo — has fallen out of style with some locals.

32BJ, a building service workers union, and residents who contend the area is overrun with shoppers are organizing against an otherwise routine request by Lafayette Development Associates LLC for permission to let retailers use the ground floor and two cellar spaces at 363 Lafayette St. 

In the firm’s special permit application, Lafayette Development Associates argued it spent a year advertising the space and was unable to fill the bottom 11,066 square-feet of the 10-story office building. Now, the firm wants a permit authorizing merchants to move in below the existing tenants consisting of offices and Hillsong Church, according to the union. 

But critics say the LLC — a venture involving CB Developers, SK Development and Ironstate Development — did not make a good-faith effort to recruit tenants allowed in the ground and cellar levels, such as bike shops, furniture showrooms or houses of worship. And 32BJ, which represents building cleaning, maintenance and security personnel, is pushing back against what it describes as a perk for property owners with a record of driving down wages. 

"We have principles, and we’re not going to allow union busters and wage thieves and unscrupulous developers to come into our neighborhood carte blanche," said Sean Sweeney, director of the SoHo Alliance neighborhood group and a member of the Community Board 2’s Land Use Committee.

Ironstate Development did not respond to requests for comment.

Lafayette Development Associates hired Jones Lang Lasalle on Oct. 8, 2017, which spent a year advertising the space in the media, listing it with brokers and informing industry groups, according to the permit application.

Meanwhile, a website showcasing the development plans included from October 2017 to May 2019 a downloadable brochure that identified the ground-floor as a retail space, according to 32BJ and others following the application.

32BJ said the ads were insufficient because they were directed at "wholesale and manufacturing" tenants and not the full range of potential occupants. At the Department of City Planning’s request, the firm took out additional ads specifying that the cellar levels were available at $40 per square foot, rather than simply stating the ground level’s $80 per square foot rate, according to the application.

Sweeney said permits for ground-floor retail were prolific in SoHo, but he long-ago gave up on fighting them as the community turned into a virtual shopping mall during business hours.

Still, he said the 363 Lafayette St. site stood out because the city is now studying development in SoHo and NoHo and has argued that the pervasiveness of permits shows the current zoning may not make sense.

"The city is the one that has broken the system by not enforcing the rules, as is," said Andrew Berman, executive director of the Greenwich Village Society for Historic Preservation. "Our main concern is the integrity of the process."

Rachaele Raynoff, a spokeswoman for the Planning Department, said the public will have multiple opportunities to weigh in on the 363 Lafayette St. site before a decision is made.

"As with all technically complete land use applications, the City Planning Commission rigorously reviews all relevant materials and concerns," Raynoff said in a statement.

Alison Hirsh, vice president of 32BJ, said the union became concerned about the special permit application while monitoring Ironstate Development, which she said routinely hires contractors and compensates them at rates that erode industry standards. The union said workers at 200 E. 39th St., which was also developed by CB Developers, SK Development and Ironstate Development, indicated they were not being paid prevailing wages, despite such compensation being required as a condition of the building receiving a 421-a tax benefit.

"This is a developer that has a history of lying, whether in terms of worker standards and undermining the legally established wage and benefits standard, or in terms of this process," Hirsh said. "Companies that lie shouldn’t be granted special consideration by government."

The full Community Board is slated to consider the permit application Thursday, according to its website. Manhattan Borough President Gale Brewer will then also play an advisory role in the matter, before the City Planning Commission votes on it. 

After that, the City Council could chose to weigh in on the application and overturn the City Planning Commission’s decision. The mayor, however, could then veto the move. 

City Councilwoman Margaret Chin, who represents SoHo, declined to comment on plans at 363 Lafayette St. or whether she envisions getting the Council involved. 

More from around NYC