We Got the Supply. Where's the Demand?
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By Caitlin Hawke
Anyone who has lived here for, say, over 10 years knows of the sea change at the retail level on Broadway. Gone are the fabulous mini-neighborhoods of the Upper West Side. I have recollections of typical Saturdays running around doing my local errands, dropping snow boots off to be waterproofed, buying a fillet of salmon at a fish monger like Joon's, or a lamb shank at Oppenheimer Meats, stopping in at the greengrocer on the east side of Broadway for veggies and then across the street at the Korean deli for a bunch of flowers before heading home to prepare dinner for friends. Or a winter Sunday afternoon spent at the Metro or Olympia cinemas. Or a lazy morning at a local coffee house like Au Petit Beurre, contentedly watching Broadway walk by while other patrons idled around playing backgammon.
Those were the days of lower commercial rents, to be sure. (They were also the days before etailers and mega-chains.) And each 10 blocks or so had a micro-economy, the backbone of which was a squaredealing Ma and Pa, business owners who knew their clientele and ran their own show.
We are quite fortunate in that there are still quite a few Mom & Pops left between W. 96th and 106th Streets on Broadway (see my P.S. below). Some are merchants of longstanding, anchoring their corners. Others are more recent arrivals. We need them all. But each time we lose one, it hurts. I'll write more on this in the next post.
So, have you, like me, been walking up and down Broadway and other of our avenues wondering both how do those small businesses that still exist hang on, and where have all the erstwhile Moms and Pops gone to work now? The vacancies are so bad that the New York Times ran a November 19th editorial about why New York's -- and particularly the Upper West Side's -- storefronts lie dormant.
Fueled by data gathered by City Council member Helen Rosenthal, the Times piece cited a declining retail occupancy rate in an area her office surveyed: of 1,332 storefronts censused, 161 were vacant.
The graphic at right shows a doubling in the last ten years of the vacancy rates on Broadway and Amsterdam. Helen called this vacancy trend a threat to our sense of community. And I tend to agree. You can read her small-business survey from November and dig into the details for yourself.
Is there some baked-in incentive in commercial real estate to keep stores empty and subvert basic supply-and-demand tenets? What happened to rents that fell until a tenant was found? Has it been replaced by "hedge fund urbanism" a speculative way to keep rents high? What is going on here?
But it's not just the empties. Further changing our streetscape, national chains have doubled since the last survey ten years ago; these chains now occupy 40% (up from 17% in 2007) of the storefrontage along the UWS stretch of Broadway. As rents rise, the presence of national and local chains will continue to be strong -- who else can afford unregulated and artificially-inflated commercial rents? (Yes, supply-and-demand subverters, I am looking at you.) Methinks there is a connection.
Relief might be in reach. Starting in July 2018, the threshold that triggers the Commercial Rent Tax (CRT) in Manhattan will double thanks to a brand new City Council reform. So any business whose annual rent is below $500,000 will not have to pay CRT. This is definitely a step in the right direction with some 2000 businesses poised to benefit from this tax relief. But without even more protections, we might as well all help Ma and Pa pack.
Seriously, $500,000 is the rent threshold for the CRT. Think about what a small business would have to gross just to cover half that overhead: it's 3500 fresh juices at $6 a pop every 30 days. Or the monthly sale of 1000 lbs. of salmon fillets.
Just. To. Pay. Rent.
I'm not saying every cobbler, juicery or fishmonger pays a quarter mil in rent each year, but many small businesses do. So we ought not be surprised when they go *poof!* when a massive rent increase hits them. And, more importantly, we need to do our part to support them while they are still here both with our wallets and our voices.
There are a lot of bloggers chronicling disappearances, especially this one, the gold standard, by the indomitable Jeremiah Moss. I also appreciate that Mom & Pop news outlets like the West Side Rag keep us abreast. Its founder and editor, Avi, has been bringing attention to commercial rent issues when he gets the chance, and the Rag's column "Openings & Closings" often cites rent hikes as the culprit that precipitates the death of a shuttering business. The tumbleweed storefront often follows in swift succession.
P.S. This is a big topic. So my next post will have more on the theme of the loss of Mom & Pops, with a hat tip to Avi over at the Rag whose coverage led me to my next topic. Also, for a future post, I am thinking celebrating the Mom & Pops on Broadway and Amsterdam from 96th to 106th and on our side streets from West End to Amsterdam. Have a particular favorite? Send me an email and tell me why you're a fan: email@example.com. Better yet, send me a photo of the shop's facade. Mom & Pop's should be small owner-run, independent one-offs, i.e. not chains or franchises and no corporate backing.