I recently had time to wander about the center of the diamond and jewelry business in New York, the 47th Street area. Not that I have not been there innumerable times over the years, but this time I stopped to chat with some street-level shopkeepers. It is hard to miss the obvious—many booths in the exchanges are vacant, and the assumption is that it reflects the current slowdown in the economy; or perhaps it is another developer assembling properties for redevelopment into major new office buildings.
Both assumptions are true, but they do not tell the whole story. As one vendor explained, the current slowdown has only accelerated the departure or closing of many factories in the area. He used to rely on all the workers in the factories to buy from him. Now many of those floors are empty. He also saw sharp declines in buyers from suburban areas. The rise of jewelry exchanges in the suburbs has drawn away many old-time customers.
But there is more. The district sits in one of the most valuable real estate areas in the city. The pressure to convert it from antiquated factory buildings into modern office structures is finally taking its toll. A new residential condo (of all things!) has risen on 48th Street, and a new office building is rising in the middle of 47th Street. That developer, Extell, already has taken control of a number of other buildings on the street, and they are beginning to empty. The principal, Gary Barnett, knows the diamond industry and probably fully understands that the time has come to redevelop.
Complaints from trade organizations that the diamond and jewelry business is being undone in the process do not ring true. As was the case with the printing, garment, and flower districts in New York, the moment of truth has arrived. The industry cannot pay the rents demanded in midtown New York, partly because the profit margins of most of these companies prohibit it. Never mind that this is no longer the place for manufacturing and back-office functions. Even banks have given up on that.
The kernel of the business will remain. Diamond and colored-stone dealers will still need distribution offices, some contractors will remain to service the high-end market, security and shipping are close, and there will continue to be advantages for various operators to be in close proximity to each other. All this will remain on both sides of Fifth Avenue in this area. Many others with viable businesses will scatter to the outlying areas, as has been happening for years. Many more will merge, close, and just retire from the business.
The glue that made the district so vital for so many years is not here anymore. Diamond trading goes on in private offices or over the Internet. The Diamond Dealers Club, where years ago everyone gathered to trade, has not reinvented itself to serve comparable critical functions in today’s marketplace. The trading platforms available online dwarf anything that can be found in any bourse in the world. One caster I visited told me that he was among the last of the breed. And colored-stone dealers are slowly retiring, leaving most of the trade to foreign-based, quick-service operations.
The industry has shifted location before. At one time it was centered in the Wall Street area, then the Bowery, and finally the 47th Street area after World War II. Those were the days when physical location meant everything. But 47th has been transitioning for a while, and it definitely is not a migration to a new area. Now, in a year of economic pressure for the whole country, the transition will accelerate.
We could ask if it is for the better. Perhaps it will be. Perhaps we will see an industry organized for global competition and efficient and productive distribution. I hope we will see New York—47th Street—shine as it should as the center of the leading market in the world.