A walk down any shopping thoroughfare in North Brooklyn, NYC, or much of urban USA will show a good percentage of “Retail For Rent” signs. In the past decade the square footage of empty retail in NYC has doubled. Many of these empty spaces were once filled with thriving independent businesses. The causes of this effect vary and sometimes gang up on the small business. An unaffordable rent increase once the lease is up, similar businesses moving in that divide the customer base, online mega-marketplaces, their customer base leaving the area are just some of the reasons. Each business was served an individual cocktail of lethal issues which caused them to close up for the last time.
“It is becoming nearly impossible for merchants in our community to keep up with the cost of doing business, compete with online markets, and turn a profit.”
— Grand Street BID Executive Director Erin Piscopink.
The last few years the losses of many long-term mom and pop businesses have been a series of heartaches for this community’s patrons. Sometimes an exit is more natural, due to the owner deciding to retire or illness, like in the cases of Mug’s Ale House and Rosemary’s Greenpoint Tavern. The service industry is still mostly immune from online sales as online delivery/take out is still done mostly in house. However, ghost restaurants are an evolving trend: with virtual or commissary kitchens that focus on takeout only and use third-part delivery services.
“It has become increasingly difficult for retail brick and mortar businesses to survive the piling on of new expenses, legislation, and regulation,” said Grand Street BID Executive Director Erin Piscopink. “Over the years, the majority of our retail spaces on Grand Street have become occupied by service businesses because it is becoming nearly impossible for merchants in our community to keep up with the cost of doing business, compete with online markets, and turn a profit.”
Three businesses closed in 2018 that I was a regular customer of, and all of them cited the increase in their rent renewal as being the reason for moving on. Two were on their sixteenth year of operation in the community and one was on their eleventh year. Whisk, the last one referred to, was located on 231 Bedford Avenue. Whisk’s Facebook post on April 21, 2019, which announced their closing, stated that business was prosperous enough to sustain their first rent increase of 114% (where they went from paying $8,625 per month to $18,452). The last increase would have put their rent at $26,500 per month. Whisk has since moved to 197 Atlantic Avenue and the spot they occupied on Bedford Avenue looks to be divide into three commercial spaces, one of which is filled by Hungry Ghost Coffee.
On the other hand, independent landlords are another form of small business. They have their own expenses to pay.
“Landlords/property owners are usually responding to the increases they must meet to satisfy the city’s bottomless coffers!”
— Betty Cooney, Executive Dir. Graham Avenue BID
Betty Cooney, Executive Dir. Graham Avenue BID sees other components that drive up commercial rents. “As far as crazy rents…talk to your local elected representatives about easing commercial property taxes which drive up your rents and also urge them to reduce the fines and small business cost of doing business with the city. Landlords/property owners are usually responding to the increases they must meet to satisfy the city’s bottomless coffers!” she said.
In her role as executive director of the Graham Avenue BID for nearly twenty years, Cooney has seen change in her district. She advises, “Online sales are hard to compete with, but offering local delivery, installation help and other information not provided by Amazon etc. make them more appealing to the less savvy customers/or the older customers who are challenged online. Find ways to personalize your services and let them know who you are and how long you’ve been in their neighborhood. Also build your customer base don’t rely on what used to be or used to work; things are changing and so must you!”
On November 14, 2019 Council Member Stephen Levin introduced Intro 1796, his legislation that would establish a system of commercial rent registration and regulation applicable to retail stores of 10,000 square feet or less manufacturing establishments of 25,000 square feet or less, and professional, services or other offices of 10,000 square feet or less.
“We have a big vacancy rate in the city and turnover is enormous. It’s not just the Amazon effect. In a lot of areas, the rent has gotten so high that small businesses can’t afford it. I’ve seen small businesses closing down constantly and it’ll always be about the rent,” stated Levin in a Crain’s New York Business piece published on November 11, 2019.
Mayor de Blasio advocates for a state vacancy tax. On the January 27, 2020 Brian Lehrer Show (WNYC) de Blasio stated, “There is a crisis now, first it’s a capitalism problem — the laws allow a landlord to jack-up the rent as much as they want. Second problem is a consumer problem — if you love your local business you have to spend money there. The city and state can do a lot more. The state piece is very powerful here, the vacancy tax.
… I want to see Albany act to put a tax in place that stops the landlord from jacking up the rent and leaving the vacant property.” This tax would penalize landlords whose rent increases have driven a business out and the space to remain vacant for an extended period of time.
As for now, the power is in the hands of the consumer. Go forth, enter a store, and make a purchase.