Chic Scaffolds Finds an Audience – Crain’s New York Business

By: Aaron Elstein of CRAIN’S NEW YORK BUSINESS. Original article can be found here.

Maribel Lieberman’s ground-level storefronts in a SoHo loft building are some of the most attractive retail spaces in the city.

But for the longest time she couldn’t fill her three vacant spaces. The pandemic was one reason.

Another was the dreary steel pipe–and–green plywood shed covering the sidewalk while work was being done on the roof.

In May she sprung for an Urban Umbrella, a prettier kind of sidewalk shed that’s finally disrupting an industry whose unsightly work has been a defining element of the New York pedestrian experience since the 1980s. Lieberman is now in talks with a tenant to take all of her empty Broome Street space.

“I credit the Urban Umbrella,” she said. “Nobody objects to having it around.”

Across the city, 9,000 sidewalk sheds swallow up 1.8 million linear feet of space, equal to 335 miles. More sheds clutter sidewalks than five years ago. Even office buildings with almost no one working inside have sheds outside.

Mayor Michael Bloomberg was so disgusted by the relentless spread of sheds that in 2009 he held a beauty contest challenging the real estate world to come up with a more attractive version. Urban Umbrella won first prize, but it didn’t catch on because most landlords refused to pay for a temporary structure that costs tens of thousands of dollars more than the standard
utilitarian model.

The pandemic changed that. Surviving retailers possess more bargaining power than they have had in decades, so to keep them from fleeing, landlords whose buildings need repair are puttin’ on the Ritz and installing whiter, lighter, brighter Urban Umbrellas.

“It distinguishes yours from another property,” said Brian Altman, president of leasing at the Feil Organization, which owns 26 million square feet of space.

At 225 Park Ave. South, landlord Orda Management installed an Urban Umbrella as part of $150 million in upgrades for the 112-year-old building, where Facebook and BuzzFeed have replaced tenants such as the Port Authority of New York and New Jersey and Baruch College.

“The rent has gone up and so has the stature of the building,” said John Moran, Orda’s vice president of operations.

It’s sweet vindication for Urban Umbrella. Even with $18 million in venture funding, it struggled to break into the scaffolding business, which generates an estimated $1.5 billion in annual revenue for the city’s hard hats.

“I’m amazed. I thought Urban Umbrella was a dead dog,” said Ken Buettner, CEO of York Scaffold Equipment Corp. in Long Island City. “It’s driving the industry to clean itself up and come up with something better, and for the public, that’s a good thing.”

“We’ve shown there is a market for what we do,” Urban Umbrella CEO Benjamin Krall said, adding that 100 of his posh sheds stand in the city.

That’s a sliver of the total, but it’s enough to have caught the attention of rival builders, who now are busily working on their own aesthetically appealing sheds.

Universal Builders Supply, a 90-year-old firm whose scaffolding has enveloped Grand Central Terminal and St. Patrick’s Cathedral, has developed the CanopY, a shed that stands in front of the American Institute of Architects’ office near Washington Square Park. With its white
columns, colorful LED lighting and a ceiling that lets the sunshine in, the CanopY is undeniably handsome. It also looks a lot like an Urban Umbrella.

“No, it’s different,” UBS President Chris Evans insisted, pointing out that the CanopY on LaGuardia Place is wider than a nearby Urban Umbrella built over a narrower sidewalk. “A jogger would sail through this. Imagine a jogger going through the Urban Umbrella.”

Urban Umbrella accuses UBS of stealing its proprietary ideas, and in June it threatened to sue unless the firm ceased its “potential misappropriation.” Krall said he is “actively pursuing” legal action, although he has not filed suit.

Asked about the legal jostling, Evans replied in a written statement, “We believe there is room for a variety of innovative solutions to enhance the streetscapes in New York and beyond.”

Opportunity knocks because shed construction is arguably the best business in New York real estate. It is certainly the steadiest. Data from the city shows that slightly more sheds cover sidewalks than five years ago. Moran, the Park Avenue building manager, said shed specialists have the best business model he’s ever seen.

“You rent out a bunch of pipes and planks, take them back when the project is done and then rent them again. All you need is a yard big enough to store the stuff,” he marveled. “I should have gotten into sheds.”

Tragic origins

The never-ending good fortune is thanks to Local Law 11, adopted in 1980 after a piece of masonry broke off an Upper West Side building and killed a college student. The law requires owners of buildings higher than 6 stories to inspect their properties’ facades every five years. When repairs are necessary, a sidewalk shed must be installed for the duration of the project. Over time the law has been broadened, usually in reaction to accidents.

A handful of big players, such as UBS and York, do most of the major shed jobs, and scores of smaller nonunion firms fight over the rest.

Erecting a 200-foot-long standard shed costs between $25,000 and $45,000, industry insiders said, two-thirds of which is paid upfront and the rest when the shed is taken down. In between, the rent ranges from $1,300 to $1,800 per month. An Urban Umbrella of similar size costs $45,000 to install, and the rent is $5,000 per month.

The rent makes sheds lucrative for builders because the structures can stick around an awfully long time, especially when a landlord can’t afford repairs and no work is being done. One shed loitered outside the Department of Buildings office at 280 Broadway for 11 years, or until 2019. Another has stood almost constantly at the corner of West 115th Street and Lenox Avenue in Harlem since 1990.

“I mean, come on,” said Dianne Howard, a real estate broker who walks past it every day.

The de Blasio administration ordered the New York City Housing Authority to remove miles of dormant sheds years ago, but City Council bills that would force private landlords to do the same have hit a wall. City inspectors aren’t interested in exposing pedestrians to falling debris, especially after one was killed two years ago in a tragic replay of the accident that led to the creation of the industry.

Alexander Schmiedt, president of the Americas for Swiss watchmaker Vacheron Constantin, never encountered sidewalk sheds anywhere else in the world. When his company took the bold step in June of opening a flagship boutique on East 57th Street, the sea of sheds covering the block dismayed him.

“As we got close to moving in, the more insecurity we had,” Schmiedt said, so the store rented an Urban Umbrella. “We had to make lemonade out of lemons.”

Brighter outlook

The sea of sheds is so vast that city inspectors struggle to keep their heads above water. In July an audit by the New York state comptroller’s office criticized the Buildings Department for poor oversight and safety lapses.

“Sidewalk sheds are a fact of life in the city, but they don’t need to be the nuisance and the danger that they have become,” Comptroller Thomas DiNapoli grumbled.

The Buildings Department said it has strengthened enforcement.

When New Yorkers return to their offices, the rising popularity of the Urban Umbrella means some Midtown and downtown sidewalks will be less dark and cramped. The big question is, will aesthetically pleasing sheds spread from the city’s business corridors into neighborhoods?

Now that a competitive market for an alternative is finally forming, prices should fall enough that the good drives out the bad and the ugly, said Howard Zimmerman, an architect who specializes in building exteriors.

At least for now, however, prices remain stubbornly high.

“So much building work is going on,” Zimmerman said, “shed companies are running out of inventory.”