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July 25, 2008

The Tea Lounge Bids Adieu

Signs have been posted for weeks that the 7th Avenue location of Tea Lounge is closing due to a hefty rent increase, but latte sippers got a shock yesterday morning when a new sign went up: Thursday, July 24 was the cafe's last day of business—not even a ceramic mug was left on the shelves. A rumor circulated that a Vietnamese sandwich shop might be taking root there, though Tea Lounge workers intimated the deal fell through. Anybody know what'll go in the space next?
Two Down in Park Slope [Brownstoner]
Background photo by kansasliberal

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Can anyone give me an idea of what these rents are now going for? And an idea of the square footage?
Thanks

Posted by: daveinbedstuy at July 25, 2008 9:16 AM

I would be over the moon to have a Vietnamese sandwich shop in the neighborhood.

What a good idea, although too bad it sounds like it fell through.

Five Guys Burgers on 7th opens today everyone!

Posted by: 11217 at July 25, 2008 9:28 AM

11217, I love the Five Guys on Montague. Good burgers excellent fries (as far as fast food burgers and fries go). A Vietnamese sandwich shop. Hmm, can you recommend an existing one that you know of?

Posted by: Biff Champion at July 25, 2008 9:40 AM

It's gonna be a bank or a chain store.

Posted by: Lumpasaurus at July 25, 2008 9:45 AM

I overheard a conversation at the dog park this morning - the people were saying the rent increased to $12,000/month! Not sure if this is true, but I thought I would pass the information along. Any ideas on what kind of businesses could afford that rent????

Posted by: slopedoglover at July 25, 2008 9:46 AM

slopedoglover, I think Lumpasaurus answered your question. Geez, it seems Park Slope is getting too popular for it's own good by pricing some decent places out of the neighborhood.

Posted by: Biff Champion at July 25, 2008 9:48 AM

Biff:

This is one of my favorite places in Manhattan:

Nicky's Vietnamese Sandwiches
150 East Second St. (Ave. A)
212-388-1088
Nicky's serves up classic bahn mi with paté, ham, ground pork, pickled carrot, cucumbers, cilantro, jalapeno, and mayo on a baguette at this small East Village restaurant.
Neighborhood: East Village (Map)
Subway: F, V to 2nd Avenue
What to Order: Classic Vietnamese Sandwich + Summer Rolls + Fresh Lemonade = $7.45

Posted by: 11217 at July 25, 2008 9:53 AM

I think the rent is more like 10K. The place directly across the street from here was Red Hot Chinese and it closed last year due to rising rent, but then recently reopened as Red Hot 2.

So the idea that is MUST be a chain or bank is not true.

I think these landlords need to watch the news a little more and realize that we might be in for a prolonged period of economic weakness. Lower your freakin rents and get all these vacant storefronts filled up!!

Posted by: 11217 at July 25, 2008 9:55 AM

Biff...Nicky's Vietnamese Sandwiches, 311 Atlantic
Haven't tried it though.

Posted by: daveinbedstuy at July 25, 2008 9:56 AM

Nicky's on Atlantic is good. And the one on Bergen off of Smith is really good.

Posted by: Breukelen at July 25, 2008 9:59 AM

Biff doesn't need to trek into Manhattan for great banh mi. Look no further than the Sunset Park Chinatown: Ba Xuyen at 42nd st & 8th Ave. You can google for a review of the raves.

Posted by: tiptoe at July 25, 2008 10:01 AM

I had no idea there were Nicky's in Brooklyn too!!

Still would love to have one in PS...

Posted by: 11217 at July 25, 2008 10:01 AM

The Nicky's in Boerum Hill is just as good as the original. Their Banh Mi w/chicken is very tasty.

Posted by: jwald at July 25, 2008 10:02 AM

11217...the same thing is true in Bed Stuy. There are four vacant storefronts on Lewis Ave a block up from Peaches. They are all in decrepit shape ranging from burned out to just plain awful. All are in need of floors, ceilings, walls, new electric service, etc. They remain vacant because renovations to bring them up to habitable condition are $75-120,000. No business is going to take on that capital risk given the current potential for sales in the area.

And, the rent expectations are too high ($2,400 per month +/-). These rents would be cheap in any other part of Brooklyn but Bed Stuy doesn't have the foot traffic all day like other parts do.

Posted by: daveinbedstuy at July 25, 2008 10:02 AM

Imagine how many people out there who have the desire to open a small business and can't afford it because of the rents.

ALL of these storefronts sitting empty all over this borough, all these people with great ideas for little shops and the one thing standing in the way are these greedy landlords.

It's frustrating.

So many jobs could be created in this city, so many more diverse businesses flourishing. All it would take is for some of these guys to quit it with their inflated rents to make up for their tiny d*cks.

If there was huge demand at these prices, I could understand it. That would make sense in a free market. But to walk up 7th Avenue and see the same storefronts sitting there with for rent signs for years on end is just depressing.

Posted by: 11217 at July 25, 2008 10:10 AM

Can any of you econ gurus help me out with a theory I've heard?

Supposedly, vacant stores actually -help- landlords during tough economic times. Whats the reason behind this?

There are storefronts all over Brooklyn that have been vacant for not just months but -years-. I've heard most landlords just won't budge on high rents. I understand tenacity and stubbornness but is there more behind it?

Posted by: Prodigal_Son at July 25, 2008 10:12 AM

Thanks 11217 et.al. I appreciate the recommendations. I'll definitely try Nicky's. It sounds like there's one close to me.

Posted by: Biff Champion at July 25, 2008 10:15 AM

Dave, did you make it to Peaches the other night? How was it?

Posted by: Biff Champion at July 25, 2008 10:18 AM

Not just in Brooklyn- this is the same story in Manhattan where thousands of small businesses are driven out (and jobs lost), especially in the big condo boom. Im helping my friend move her historic garment center business that's been around for over 100 years because their building was sold and is going to be torn down for- you guessed it- condos. And talk about waste- the building is beautiful with wonderful neo-gothic detail and could be gut-reno'ed but they're going to tear it down and put up an ugly POS instead that won't be built with near the quality construction this building has.

FYI- her rent was around 12,000, so the Smith St. rent quoted above is a real shocker.

Posted by: bxgrl at July 25, 2008 10:21 AM

Hey bxgrl. Where's your friend moving to?

I believe the estimated rent posted above was for 7th Ave, not Smith St., although it's probably comparable.

Posted by: Biff Champion at July 25, 2008 10:24 AM

Biff...been to Peaches a few times. Food is pretty good. Service is very friendly and only a little spotty given that its really their first full week and it was literally packed last night.

We are trying to get some brownstoner posters there next Wednesday. Anyone wanting to come email me and i'll organize all of us... bklynsocialclub@yahoo.com

MM and a few others have alreadty responded

Posted by: daveinbedstuy at July 25, 2008 10:26 AM

i pay 9000 dollars for 1200 sq ft on a better stretch on seventh ave in a lease i signed within a year. unless its food i dont see more then this possible.

Posted by: mule at July 25, 2008 10:34 AM

Dave, will you be signing autographs and taking pictures with your adoring throngs of posters?

Back to the topic for just a moment: I'm wondering what the rent is on Court for the Tea Lounge there. It sure seems the one above on 7th was popular based on the stroller traffic. It makes me wonder, along with slopedoglover, what the Sam Hill kind of business will be able to thrive there.

Posted by: Biff Champion at July 25, 2008 10:35 AM

Probably have to buy drinks for all of the ones that I've offended or p1ssed off!

It is still BYOB BTW

Posted by: daveinbedstuy at July 25, 2008 10:48 AM

I think the Tea Lounge on Union near 7th in Park Slope was always the big stroller hang out, no?

Whenever I walked past this one, it seemed more subdued.

A gorilla coffee would do great in this spot, in my opinion. I think the South Slope is a slightly different market than the North Slope, and reflects more of the demographics of 5th Avenue in terms of a younger and more single set.

I also happen to think the Tea Lounge sucks. It's rundown (the sofas look as though they harbor bedbugs) and the coffee isn't that great. They rode the wave of their brand for a while, but in the end it's a good product that counts, and I never felt Tea Lounge had it.

I'm partial to Ozzie's myself.

Posted by: 11217 at July 25, 2008 10:49 AM

11217, what do you mean? I thought the Tea Lounge in the picture IS the 7th Ave. one.

Btw, I'm a big Ozzie's fan too and wish there was one in BH or CH. Love going there when I'm in the Slope.

Posted by: Biff Champion at July 25, 2008 10:53 AM

bxgirl:

Residential development in the Garment District has been minimal. If you look at a zoning map, you'd find residential use is actually not allowed in the vast majority of the district.

To put things in perspective - all that land was owned by the Astors. Back in the days before zoning laws, he was reviled for allowing the area to be developed with huge industrial buildings. It's a big change from the other side of the island where more civic minded rich people prohibited such development, even with restrictive covenants. You'll also find that the Garment District is one of those great parts of the city where the zoning code is anything but contextual. The average FAR there is like 15, way beyond what has ever been allowed in many decades. You even find some choice buildings with 25+ FAR measurements.

For that reason, you're not going to see any knockdowns of the vast majority of the garment district lofts anytime soon, even if the allowable uses change.

So, I call BS on your little story.

Posted by: Polemicist at July 25, 2008 11:13 AM

slopedoglover-- $12,000 a month really isn't very much for a commercial space of that size.

Posted by: eight aver at July 25, 2008 11:14 AM

I don't understand why the landlord would be so set on getting such a high rent. Even if he eventually gets 12k, he will loose lots of money for having it sit empty till he finds someone.
It would have been in his best interest to negotiate a rent that the tenant can afford in order to maintain foot traffic to the area. Once the area is greatly improved and traffic is higher he could raise the rent to 12k.
hard times are ahead. he should have been wiser. no telling how long this place will remain empty.
get fresh on 5th avenue was vacant for over a year before they moved in.

Posted by: troll at July 25, 2008 11:22 AM

does anyone have any idea what commercial space on 7th goes for? (per sq foot).
how big is/was the tea lounge?

Posted by: troll at July 25, 2008 11:41 AM

Regarding why landlords let properties sit vacant for years...

nkotsonis here has posted on prior occasions that landlords (like him) do this because it lowers the tax basis of their property. They set supply at extremely high prices calling it "market" (because some loaded -- but, hah, failing -- chain like Starbucks overpaid somewhere near that recently or somesuch) and let matters play out such that...

1) either someone else comes in at that nutball rate and they make greater profit margins

2) the property sits empty, forcing the city to lower the taxes on the place considerably, enabling much larger long-term profit margins when they finally do get someone to pony up to higher rents.

So yeah, long-term, they make much more profit by letting things sit empty.

Whee.

Posted by: jeffrey at July 25, 2008 11:56 AM

Well Polemicist- tis ignorant you are. Your little zoning maps don't tell the whole story which, if you had spent as much time in the garment area as you do posting ignorant drivel, you would know. (but congrats on the Astor history- it's good to know you have enough of a brain to google wiki).

You'll also notice that you love putting words in people's mouths which points out your vast inadequacies with reading comprehension, debate and simple discussion. No where did I say there would be mass knockdowns. But if you would like to actually be more knowledgeable than you think you are, go to midtown and walk around. Then come back and post. And FYI- I practically grew up in the garment center- my dad was a garmento, and because of business I am frequently there, so my knowledge of the changes in the garment center, are far more than you will ever comprehend.

Biff- they are moving around the corner to 37th st. and 5th. I have to bring you there sometime- her store is a real treasure and I'm glad she was able to find a new space and not go out of business. FYI- the building she is moving into has a small lobby with wonderful original WPA murals.

Posted by: bxgrl at July 25, 2008 12:10 PM

It sounds as though there ought to be some sort of tax penalty for vacant store fronts, if landlords are deliberately depriving the city of sales and income tax revenue.

Posted by: tscola at July 25, 2008 12:11 PM

tscola, I don't know how that could possibly be enforced. And what about landlords who simply can't find tenants even when offering reasonable rents? I don't think it's fair to double whammy them.

bxgrl, I would love to see the new store sometime.

Posted by: Biff Champion at July 25, 2008 12:17 PM

Biff, what rent is "reasonable" if there is no demand for it (at that level)?

Everything rents at fair market price.

Fair market price is where demand meets supply to clear the market, not where supply artificially thinks it should be propped up to be.

That said, taxes should absolutely be in lock step with increases or decreases in income on a property.

But gaming the system as described above (limiting supply to artificially high prices, to get gov't benefits as if demand did not exist) goes against the principle of that.

Again, set the right price, and any property (especially in these neighborhoods, yeesh) will have sufficient demand.

Posted by: jeffrey at July 25, 2008 12:37 PM

eight aver- my friend's space in the buildings being knocked down included 2 huge store spaces side by side and 2 mezzanine levels that were half the size of the ground floors, plus the full basement under one store (which I believe also ran under the sidewalk to the curb as well, not stopping at the prop line. I'm not totally certain on that, it's hard to judge in the basement but there is a small room that juts beyond the main room) and part of the basement of the second store. So it was a massive amount of space in a prime midtown business district between 5th and 6th.

I just don't see most small Brooklyn businesses being able to sustain that kind of rent.

Posted by: bxgrl at July 25, 2008 12:38 PM

jeffrey, ok, I suppose I could have said, "And what about landlords who simply can't find tenants even when offering fair market prices?" On the other hand, I could ask you who can say what is a fair market price? That's no less vague than saying "reasonable".

Regardless, my point was simply that the last thing we need is someone trying to assess the motives and efforts put forth by landlords in trying to rent their properties and hitting them with tax penalties when their places sit vacant.

Posted by: Biff Champion at July 25, 2008 12:49 PM

Biff, just to clarify or reiterate what I mentioned above, fair market price is the highest price point where demand actually exists, where the market is cleared.

Yeah, I agree, I absolutely do not support penalties.

What I do support is a limit on how long one can seek lower taxes for an idle property.

You'd better believe that if landlords were only allowed one year to reset their tax base, that they'd adjust their prices to actual demand (offers made) like the rest of businesses out there that are subject to pricing whatever the market will bear.

Posted by: jeffrey at July 25, 2008 1:03 PM

Thanks jeffrey. I think your suggestion is a fair compromise.

Posted by: Biff Champion at July 25, 2008 1:05 PM

Except no rational landlord is going to keep a vacancy in order to lower his taxes. It makes no sense and if you thought about it for more than a sec you'd realize that too.

It is true however that the LL doesnt eat the whole loss, since it can offset other income, but that is no different then a LL doesnt reap all the profit either - b/c of taxes.

Any rational LL wants to rent his/her property. As for why dont LL simply take all these people with "great ideas for stores" and offer them a lower rent to avoid vacancy (and not be greedy). Thats easy....

Because 1. For the most part they arent 'great ideas' they are lousy or marginal stores to start and the vast majority of people who think they can operate a store, have no experience and can't.

So the LL learns very quickly that it isnt in his best interest to give up months of rent for a new merchant to get opened and then quickly fail b/c they have no idea how to run a store, or the store itself stinks. Better to hold out for a professional merchant (which yes may be a chain) because a professional merchant will quickly realize that $1 or $2 Gs more or less of mo rent is irrelevant when you have a good concept well executed and virtually free rent is irrelevant to keep a lousy merchant and/or a marginal idea in business.

The demographics of Park Slope can EASILY support these rents, the problem is that there arent merchants who have the concept and/or the management to make it work.

Posted by: fsrg at July 25, 2008 4:25 PM

"Except no rational landlord is going to keep a vacancy in order to lower his taxes." - fsrq

Not at all the case.

One of the biggest landlords of 7th Avenue, Nicholas Kotsonis, freely admits and explains this as commonplace in various brooklynian.com forums posts here:
http://shurl.org/xnKve

Your post is mistaken as follows:

1) It IS about a tax reduction incentive loophole

2) There are PLENTY of well-managed businesses that are seeking these spaces, it has nothing to do with questionable management of 100% of interested parties.

Posted by: jeffrey at July 25, 2008 4:46 PM

Well then Nicholas Kotsonis is a moron and knows nothing about finance/economics. Just b/c you are a LL and you think you are making an economically rational decision doesnt mean you are.

Please explain why this tax 'loophole' doesn't apply in other high rent retail districts - like Manhattan?
Hell in alot of retail leases - the TENANT pays their share of the RE taxes anyway......

Posted by: fsrg at July 25, 2008 5:01 PM

Even Madison Avenue in the 70s-80s goes through periods when legions of storefronts are left idle.

Not sure what you mean.

Posted by: jeffrey at July 25, 2008 5:10 PM

It'll probably be a Bank of America. It's pathetic. I've lived in the nabe for 24 years and so many great local small business are being forced out by greedy landlords. In a few years, 5th and 7th Avenues will look like a big old mall. Applewares is closing too. The South Slope had so many cool places and they are turning over so quickly. I know the economny is bad, but if the rents were manageable, they might have been able to hold on. The only comment I will make is that some of the shops that open don't have a chance because they aren't unique and are overpriced. What Park Slope needs are a great Greek and Indian restaurant, a really good deli and clothing for normal sized women (Lee Lee's Valise on Court Street - come to Park Slope!!!)

Posted by: jilly at July 25, 2008 5:14 PM

...and by 70s-80s I mean streets, not years. Although if we are to discuss years, there have been examples of this during extended periods during each of the last 3 decades, when landlords overshot boom cycles by deliberately raising rents so high their clients could not afford renewal, at which point they let properties sit a year or two (or more) and reaped benefits of lower RE taxes.

All one needed to do was walk down the street during any of those down cycles to see the proof.

Posted by: jeffrey at July 25, 2008 5:16 PM

I don't know what tax break the other landlord is talking about. Any tax benefit would be much less then the rent he could get.
I own a commercial property in park slope and its to my best interest that the buisness is successful, even if it means asking below market value rent. This is especially true if its a unique buisness that draws foot traffic to the area.
If too many stores remain closed it will greatly decrease the foot traffic to the area. In return it would be much harder to rent the store when you finaly decide to rent it out.

Posted by: landlord at July 26, 2008 10:55 AM

landlord, wish everyone thought that way and we could avoid streets dotted with long-empty properties.

Your approach definitely makes for much more useful, varied, welcoming and neighborly streets.

Posted by: jeffrey at July 26, 2008 1:28 PM

So Hanco's on Bergen beats Nicky's on Atlantic any day. Never went to the Tea Lounge on Court street nor the PS locations. So no comment on that - but something like Hancos would be a nice additions any day - Hancos for some reason never gets the press that Nickys does.

But to the one comment about Lee Lee's Valise in carroll gardens on court - and please understand that I mean no harm and no offense - I really think that store isnt going to last - we live around the corner - and I by no means would categorize the shop for women of normal size. Women of normal size are medium and large. Women who would shop there must be much, much larger and it just doesnt seem to fit into a hood where people do so much walking. That store is always empty. I dont think it would last in PS either.

Posted by: Ljubitca at July 26, 2008 6:08 PM

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July 25, 2008

The Tea Lounge Bids Adieu

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