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Community & Connection in Manufacturing

From Factories to Makerspaces: The Transformation of MaKen Studios in Philly

“Philadelphia was once the largest light manufacturing center in the world,” said Jeff Kahn, a principal at Shift Capital. The impact investment group’s brick-and-mortar homage to that history is MaKen Studios North and South, a pair of old factories in the Kensington and Harrowgate neighborhoods that were rehabbed for artists, makers, and light industrial manufacturers.

Shift Capital developed the MaKen buildings to bring an economic shot-in-the-arm to Kensington, a workforce neighborhood that has suffered from disinvestment and struggled with drug trafficking for decades.

Kahn chooses to see Kensington in light of its blue-collar past. “We’re simply reigniting things that were here and very successful a long time ago.”

MaKen Studios North and South together amount to about 300,000 square feet. MaKen Studios North is slated for art-based entrepreneurs and creative businesses searching for 500 to 3,500 square feet of space. MaKen Studios South, on the other hand, is generally geared towards bigger space demands, with spaces starting off at 1,500 square feet, and open floors that go up to 25,000 square feet. These are for manufacturers, large-scale visual artists, or businesses.

Both buildings were created to provide long-term tenancy to creative entrepreneurs where rent predictability is key to their success. About 55 makers and manufacturers are tenants in both buildings.

Shift Capital was able to take these projects on by raising capital from impact investors locally and internationally. Through the Philadelphia Industrial Development Corporation, LISC provided $3 million in construction loans for MaKen North and South. Goldman Sachs and the Philadelphia Contributionship were other key financiers of the developments.

Shift Capital said the reactivation of MaKen Studios North and South has energized a community both within and outside the buildings, and attracted affordable and livable residential properties, new businesses filling vacant storefronts, and a stronger commitment to the community from city government.

In addition to MaKen Studios North and South, Shift Capital is partnering with local community development and technical assistance organizations to create a long term community-owned organization that will redevelop commercial and residential real estate along the adjoining Kensington Avenue corridor.

Q&A

Why does manufacturing matter to Shift Capital?

Shift Capital sees manufacturing as part of the creative economy that they would like to attract and preserve in the Kensington area.

Did Shift Capital have a history of manufacturing development?

No.

How did Shift Capital develop capacity for a manufacturing real estate project?

The MaKen buildings were part of Shift Capital’s comprehensive neighborhood strategy. They believe both MaKen Studios North and South will serve as a catalyst to activate and energize the community. These buildings connect the dots between transit-oriented development, economic development, and quality of life. Shift Capital believes creating affordable space for small businesses, makers, and manufacturers will lead to an economic infusion into the neighborhood through job creation, and help improve the health and safety of the community.

Does the neighborhood around both MaKens have a history of manufacturing?

Yes. The Kensington and Harrowgate neighborhoods used to be major workforce neighborhoods for sectors like manufacturing.

How important is it to maintain fabrication activity in the MaKen buildings?

There is not an explicit rule to preserve fabrication in either of the buildings.

What role did the board play in these projects?

Shift’s Capital board was influential in the startup phase of Shift Capital itself, but the company has since transitioned out of a traditional board and now works with its members on a need basis.

Any focus on inclusion and equity when selecting tenants?

Shift Capital does not have a formal process for curating a diverse tenant base, but they do look to find tenants that are value-aligned and committed to the neighborhood. Thirty-seven percent of commercial/ industrial tenants in Shift Capital’s real estate portfolio are minority or women-owned businesses.

Is Shift Capital involved in workforce or other initiatives outside of property management?

Yes. Shift Capital has created over 560 temporary jobs in construction/maintenance and created/brought into the neighborhood close to 490 jobs through its projects in Kensington and Harrowgate. There is no formal process to connect residents with jobs working for maker or manufacturer tenants, but Shift Capital said those connections have happened organically.

Is Shift Capital involved in creative placemaking work that involves tenants, the building, and residents from the neighborhood?

Shift Capital works with citywide programs like Philadelphia Open Studio Tours (POST), American Craft Council, and DesignPhiladelphia to connect the community with the craft of its tenants. Tenants are also involved with community outreach and creative activities that connect residents with artistic expression in the neighborhood.

What are partners doing to ensure manufacturers can afford to remain in the MaKen buildings even if market dynamics change in the neighborhood?

Kahn said they’ll never increase rent on anyone more than three percent a year once Shift Capital achieves the rents they forecasted, which by design are meant to be the lowest in the class of properties they own.

What type of entity is the developer?

LLC.

Did Shift Capital receive assistance from local government?

Yes, the Philadelphia Industrial Development Corporation.

Were any zoning variances needed for this project?

No, apart from occupancy on a floor designated for events.

How many tenants are in the space?

There are roughly 55 tenants, most of which are in MaKen Studios North.

Are there opportunities for on-site equipment sharing?

No opportunities for shared services, other than moving equipment.

What are Shift Capital’s sources of financing for the MaKen buildings?

Philadelphia Industrial Development Corporation, Goldman Sachs, Philadelphia Contributionship, and social impact investors.

What square footage options do tenants have?

In MaKen Studios North, spaces range between 500 sq. ft. to 3,500 sq. ft. MaKen Studios South consists of spaces that range from 1,500 sq. ft. up to open floors that are 9,000 to 25,000 sq. ft.

What is the rent per square foot?

At MaKen North, once Shift Capital achieves their target rental of $12 per sq. ft., they will increase rents by three percent per year. Spaces at MaKen South command “a slightly higher rent” than spaces at MaKen North, according to Shift Capital.

How long are the lease terms?

Leases are generally two years or longer.

Total square feet?

There are 90,000 leasable sq. ft. in MaKen Studios North and up to 110,000 leasable sq. ft. at MaKen Studios South.

This case study was originally published by Urban Manufacturing Alliance in 2019 as part of “All About the Jobs: Eight Mission-driven Industrial Developers on How Their Spaces Anchor Manufacturers and Support Local Economies,” a project developed in partnership with Local Initiatives Support Corporation (LISC) and students at the Albany Law School Community Development Clinic.

“Philadelphia was once the largest light manufacturing center in the world,” said Jeff Kahn, a principal at Shift Capital. The impact investment group’s brick-and-mortar homage to that history is MaKen Studios North and South, a pair of old factories in the Kensington and Harrowgate neighborhoods that were rehabbed for artists, makers, and light industrial manufacturers.

Shift Capital developed the MaKen buildings to bring an economic shot-in-the-arm to Kensington, a workforce neighborhood that has suffered from disinvestment and struggled with drug trafficking for decades.

Kahn chooses to see Kensington in light of its blue-collar past. “We’re simply reigniting things that were here and very successful a long time ago.”

MaKen Studios North and South together amount to about 300,000 square feet. MaKen Studios North is slated for art-based entrepreneurs and creative businesses searching for 500 to 3,500 square feet of space. MaKen Studios South, on the other hand, is generally geared towards bigger space demands, with spaces starting off at 1,500 square feet, and open floors that go up to 25,000 square feet. These are for manufacturers, large-scale visual artists, or businesses.

Both buildings were created to provide long-term tenancy to creative entrepreneurs where rent predictability is key to their success. About 55 makers and manufacturers are tenants in both buildings.

Shift Capital was able to take these projects on by raising capital from impact investors locally and internationally. Through the Philadelphia Industrial Development Corporation, LISC provided $3 million in construction loans for MaKen North and South. Goldman Sachs and the Philadelphia Contributionship were other key financiers of the developments.

Shift Capital said the reactivation of MaKen Studios North and South has energized a community both within and outside the buildings, and attracted affordable and livable residential properties, new businesses filling vacant storefronts, and a stronger commitment to the community from city government.

In addition to MaKen Studios North and South, Shift Capital is partnering with local community development and technical assistance organizations to create a long term community-owned organization that will redevelop commercial and residential real estate along the adjoining Kensington Avenue corridor.

Q&A

Why does manufacturing matter to Shift Capital?

Shift Capital sees manufacturing as part of the creative economy that they would like to attract and preserve in the Kensington area.

Did Shift Capital have a history of manufacturing development?

No.

How did Shift Capital develop capacity for a manufacturing real estate project?

The MaKen buildings were part of Shift Capital’s comprehensive neighborhood strategy. They believe both MaKen Studios North and South will serve as a catalyst to activate and energize the community. These buildings connect the dots between transit-oriented development, economic development, and quality of life. Shift Capital believes creating affordable space for small businesses, makers, and manufacturers will lead to an economic infusion into the neighborhood through job creation, and help improve the health and safety of the community.

Does the neighborhood around both MaKens have a history of manufacturing?

Yes. The Kensington and Harrowgate neighborhoods used to be major workforce neighborhoods for sectors like manufacturing.

How important is it to maintain fabrication activity in the MaKen buildings?

There is not an explicit rule to preserve fabrication in either of the buildings.

What role did the board play in these projects?

Shift’s Capital board was influential in the startup phase of Shift Capital itself, but the company has since transitioned out of a traditional board and now works with its members on a need basis.

Any focus on inclusion and equity when selecting tenants?

Shift Capital does not have a formal process for curating a diverse tenant base, but they do look to find tenants that are value-aligned and committed to the neighborhood. Thirty-seven percent of commercial/ industrial tenants in Shift Capital’s real estate portfolio are minority or women-owned businesses.

Is Shift Capital involved in workforce or other initiatives outside of property management?

Yes. Shift Capital has created over 560 temporary jobs in construction/maintenance and created/brought into the neighborhood close to 490 jobs through its projects in Kensington and Harrowgate. There is no formal process to connect residents with jobs working for maker or manufacturer tenants, but Shift Capital said those connections have happened organically.

Is Shift Capital involved in creative placemaking work that involves tenants, the building, and residents from the neighborhood?

Shift Capital works with citywide programs like Philadelphia Open Studio Tours (POST), American Craft Council, and DesignPhiladelphia to connect the community with the craft of its tenants. Tenants are also involved with community outreach and creative activities that connect residents with artistic expression in the neighborhood.

What are partners doing to ensure manufacturers can afford to remain in the MaKen buildings even if market dynamics change in the neighborhood?

Kahn said they’ll never increase rent on anyone more than three percent a year once Shift Capital achieves the rents they forecasted, which by design are meant to be the lowest in the class of properties they own.

What type of entity is the developer?

LLC.

Did Shift Capital receive assistance from local government?

Yes, the Philadelphia Industrial Development Corporation.

Were any zoning variances needed for this project?

No, apart from occupancy on a floor designated for events.

How many tenants are in the space?

There are roughly 55 tenants, most of which are in MaKen Studios North.

Are there opportunities for on-site equipment sharing?

No opportunities for shared services, other than moving equipment.

What are Shift Capital’s sources of financing for the MaKen buildings?

Philadelphia Industrial Development Corporation, Goldman Sachs, Philadelphia Contributionship, and social impact investors.

What square footage options do tenants have?

In MaKen Studios North, spaces range between 500 sq. ft. to 3,500 sq. ft. MaKen Studios South consists of spaces that range from 1,500 sq. ft. up to open floors that are 9,000 to 25,000 sq. ft.

What is the rent per square foot?

At MaKen North, once Shift Capital achieves their target rental of $12 per sq. ft., they will increase rents by three percent per year. Spaces at MaKen South command “a slightly higher rent” than spaces at MaKen North, according to Shift Capital.

How long are the lease terms?

Leases are generally two years or longer.

Total square feet?

There are 90,000 leasable sq. ft. in MaKen Studios North and up to 110,000 leasable sq. ft. at MaKen Studios South.

This case study was originally published by Urban Manufacturing Alliance in 2019 as part of “All About the Jobs: Eight Mission-driven Industrial Developers on How Their Spaces Anchor Manufacturers and Support Local Economies,” a project developed in partnership with Local Initiatives Support Corporation (LISC) and students at the Albany Law School Community Development Clinic.