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November 23, 2009
Greedy Landlords Causing Storefronts to Sit Empty?
The Daily News has a story about how the one-two punch of unrealistically high asking rents and the recession has resulted in a number of empty storefronts in brownstone Brooklyn. Cases in point, where retail spaces are still empty after rent increases: the dry cleaner on Court and Baltic that had to vacate after the landlord hiked the rent from $2,500 to $6,500 a month; Royal Video, above, which left its old Flatbush Avenue spot for a smaller one after the landlord was said to be asking $10,000 a month for the space; and a Myrtle Avenue shoe repair that shut down this fall. It seems, however, that while there are certainly examples of greedy/delusional landlords to be found, there aren't an overwhelming number of fresh vacancies on the main retail drags in Cobble Hill, Prospect Heights, and Park Slope—that these guys tend to be the exception, rather than the rule. Thoughts?
Brooklyn Storefronts Empty [NY Daily News]
Photo by plangently.
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It's happening all over. Here on Foster Avenue, a "mom-pop" dry cleaning/alterations store and shoe repair shop next door closed due to the landlord raising the rent. That was 4 years ago. The stores are still vacant.
I don't understand the business model that says it is better to receive no rent than low rent.
Posted by: evfred at November 23, 2009 9:14 AM
While there obviously "greedy" landlords out there, it's unfair to compare a tenants current rent at the end of what could be a 10 year lease compared to what the Landlord now wants. I think everyone would agree that some of these markets like Smith Street and this stretch of Flatbush Avenue are much better today than they were 10, 15, 20 yrs ago, whenever those original leases were signed, even in today's economy.
Posted by: Shoots and Leaves at November 23, 2009 9:16 AM
There are so many empty store fronts in park slope!! The supersavers on 7th ave off union st closed down and the landlord is asking for $10,000 a month! Tasti D-Lite just moved from union st, and then on 5th ave there are vacant storefronts such as where primo atto used to be and playa. These landlords are greedy!!
Posted by: BenCFT at November 23, 2009 9:16 AM
From what I hear, according to DIBS, this is a problem in Bed Stuy. I'm rather amazed it doesn't seem to be a problem in Williamsburg, at least not yet. Surely rents are high there but I haven't noticed too many places shutting down strictly because of rents. I hope Apple does NOT take over the Salvation Army on Bedford. We get a good deal of income from that store. There are a lot of empty storefronts on Wyckoff in Bushwick. No idea what they ask for rent. A local once claimed that. When the cops cracked down on the Bodegas for selling pot, they couldn't make their high rents any more.
Posted by: mopar at November 23, 2009 9:19 AM
Is my lifetime membership still good at the new location?
Posted by: Brokedeveloper at November 23, 2009 9:23 AM
Mopar, now that's what I call a convenience store!!
Posted by: dirty_hipster at November 23, 2009 9:24 AM
quote:
I hope Apple does NOT take over the Salvation Army on Bedford.
ugh barf. that would just be sad. ive never been to the salvation army on bedford, is it the big one?
also some places sit empty because the landlords and owners get tax breaks that sometimes will make more sense for them financially than to rent it out. they own the storefronts, they can do what they want with them, and if it doesnt make sense financially for them (the owners) what can you really do about it?
maybe things are also just evening out. you cant deny there is a huge glut in the last couple of years for yuppie-related businesses, most of which are not financially viable and just wind up being fly by night operations.
*rob*
Posted by: Butterfly at November 23, 2009 9:24 AM
commerical rent stabilization?
Posted by: dittoburg at November 23, 2009 9:25 AM
Given that the Salvation Army is homophobic and discriminatory and Apple is not, I can only hope that Apple displaces that Salvation Army store.
Posted by: zinka at November 23, 2009 9:32 AM
Shoots and Leaves "While there obviously "greedy" landlords out there, it's unfair to compare a tenants current rent at the end of what could be a 10 year lease compared to what the Landlord now wants. "
Ok, so sure it makes sense for the rents to go up after 10 years. But, they are obviously going up too much if the greedy landlords are not even able to get new tenants at this new price.
Posted by: aysataba at November 23, 2009 9:33 AM
The reality should lie somewhere in between what evfred & Shoots and Leaves said.
In bed Stuy the issue is that the commercial sites are in such a state of disrepair that the amount needed to get them to usable condition is beyond the budget of most store owners. The landlords don't seem to have the necessary funds to get them rentable. So they sit. They've been vacant for years.
I'm talking fire damage, no floor joists, etc...major structural issues that should not be the burden of the tenant.
Posted by: daveinbedstuy at November 23, 2009 9:35 AM
Speaking of retail space.
What are the commercial strips in Bed Stuy and Crown heights?
What's an ideal location to open an eatery in both nabes?
I know Fulton has lots of retail and foot traffic; any others?
Posted by: Expert Textpert at November 23, 2009 9:36 AM
i meant to send this in as a tip but might as well post it here since i didn't take a pic anyway, but that giant space on court and douglass is finally taking space. the former home court furniture space (next door to its current smaller space) is going to be an......
upscale yuppie grocery store called union market. signage in the windows indicate organic produce, prepared foods, baked goods, etc.
(also as a separate tip, they finally took down the scaffolding on court between kane and degraw, the two townhouse work looks fantastic. definitely picture worthy. on the west side of street, maybe 1/3 of the wap from degraw to kane, cooper drainage pipe marks the work).
Posted by: CG_ups at November 23, 2009 9:39 AM
I'd love to know other side of this. These huge jumps certainly seem bizarre and a lower than market rent would seem to me to be better than no rent. Unless the seemingly long vacancy is the price you pay to get market rate?
After a 10-year lock (if that's a standard commercial lease?) plus the risk for the LL of high biz failure rate would suggest some payback for LL. But still.
Any commercial lease experts out there?
Posted by: Johnny at November 23, 2009 9:40 AM
http://www.vespaproperties.com/listing_printable.php?id=1017&pt=com
I think some blame should be put on the realtors who encourage such huge rent increases.
The space needs a complete gut. Then do the math on the income required to pay the rent, utilities, employee salaries and benefits. Not many businesses could pull it off in this location, in this environment.
Posted by: Garshobi at November 23, 2009 9:41 AM
quote:
Given that the Salvation Army is homophobic and discriminatory and Apple is not, I can only hope that Apple displaces that Salvation Army store.
who cares. the salvation army helps a TON of needy people and apple does no such thing. and even if they were once a homohobic organization (doesnt someone a while back here, i think bxgirl actually, refure this claim about discriminatory practices?) one could also argue that the apple stores have discriminatory hiring practices as well, but i won't go there right now.
*rob*
Posted by: Butterfly at November 23, 2009 9:41 AM
so far no city has tried commercial rent control. The reason for that is simple. It is doubtful that it would be constitutional. While sometimes zoning has been used to try to encourage certain uses, commercial rent control would probably run afoul of the 5th amendment(taking property without compensation). Its true that the courts have allowed residential rent control- mostly in an declared emergency- you will have a real hard time with the current US Supreme Court and commercial rent control.
and finally, I always find it curious that those who rail against the use of eminent domain for private purposes would also be quick to call for commercial rent control which when you look at it, is the same thing.
Posted by: smeyer418 at November 23, 2009 9:43 AM
Expert...the "prime" space in Bed Stuy is on Lewis Ave between Decatur & Halsey. There are three empty storefrons on the block between Macon & Halsey.
There are also two prime spots available on Stuyvesant...the old Solomon's Porch on the corner of Halsey and the building on the corner of Macon & Stuyvesant. The former has legacy DOH issues and the latter needs an interior.
I think all of them can be had for around $2,500 per month and they are large...1,000-1,500 sq. ft.
There's also a smaller space caddy corner and a few doors east of Saraghina on Halsey.
Posted by: daveinbedstuy at November 23, 2009 9:45 AM
"and apple does no such thing"
You've got the lock on Apple's charitable giving then have you?
Posted by: dittoburg at November 23, 2009 9:45 AM
i am going to repost WITHOUT all the typos (i hope)
i meant to send this in as a tip but might as well post it here since i didn't take a pic anyway, but that giant space on court and douglas is finally taking shape. the former home court furniture space (next door to its current smaller space) is going to be an......
upscale yuppie grocery store called union market. signage in the windows indicate organic produce, prepared foods, baked goods, etc. no ETA on when they will open.
(also as a separate tip, they finally took down the scaffolding on court between kane and degraw, the two townhouses that were worked on look fantastic. definitely picture worthy. it is on the west side of street, maybe 1/3 of the way up from degraw to kane, copper drainage pipe marks the work).
Posted by: CG_ups at November 23, 2009 9:46 AM
Expert...are you interested in pursuing something???
Posted by: daveinbedstuy at November 23, 2009 9:48 AM
2 storefronts that have seemed to sit vacant long time on Smith St. are old Banania restaurant at Douglass and also corner of Smith/Baltic(last tenant was Jessica's ). Don't see for rent signs and don't see any activity. Package/shipping store recently closed on Smith near Bergen.
Posted by: Petebklyn at November 23, 2009 9:49 AM
In my view a certain turnover in commercial tenants is a good thing. Look at that antiquated storefront. I think it was time for it to close. We are in the tail end of a major recession so naturaly there will be vacancies as it is a very challenging time to start a new business. Commerical rent control would be a disaster. It would allow second-rate and downright awful shops and restaurants to stay open simply because they have cheap rent. It would be a sorry thing especially for those of you who like to dine out and patronize the latest and trendiest bars and restaurants.
Posted by: Minard Lafever at November 23, 2009 9:51 AM
smeyer418, think you are misinformed in your claim that commercial rent control has not been tried. Berkeley had it for a short time in the early 80s.
Posted by: aysataba at November 23, 2009 9:52 AM
Most of the bodegas are a real eyesore in Bed Stuy. They all sell the same crap and none of them provide what is really necessary in the way of fruits & vegetables (low margin, higher spoilage).
Many of the leases are coming due in the next 2-5 years and it'll be interesting to see what happens to them.
Posted by: daveinbedstuy at November 23, 2009 9:55 AM
Landlords are out of touch, shocked or hard hit by 30% to 50% decline in values this year. So don't get it, some are screwed because they had low rent tenant during upturn, get the vacancy when rents have dropped.
There are also less tenants in market with credit, national tenants nearly 100% inactive. Tough times all around.
Many entrepreneurs in market for space now, but many don't have real money or experience.
Retail is riskiest lease of all for landlords. But no question these folks are out of touch big time.
Posted by: BK realestate veteran at November 23, 2009 9:55 AM
I think that the LLs are asking for high dollar amounts BECAUSE of the threat of commercial rent control.
It may be a recession now, but if you get locked in to 50+ years of sub-inflationary rent raises, you'll be sure glad you at least started out really really high, and it isn't worth getting an extra year's rent if your property is going to be totally devalued because you cut someone a deal on rent once.
Likewise: Commercial rent control is a total disaster.
How would you like to have a street full of typewriter repair shops, cigar stores, laundromats, and mediocre red-sauce restaurants and greasy spoons -- we benefit from having stores that sell things that we like
It would turn the streetscape into a time capsule.
Rents will go down eventually so long as the city council doesn't act stupidly.
Posted by: thwackamole1 at November 23, 2009 10:00 AM
This is what I do all day everyday. DIBS was on point with the problem for many stores in what we'll call the emerging markets where there are still a number of buildings in major disrepair.
Let me break out the logic of the Landlord for you. I'm going to assume that a 10 yr lease is average, especially if the space requires extensive build-out/improvements like for a restaurant. Let's say the Landlord feels his/her space is worth $5,000/mo. Now s/he gets a few offers at $4,000/mo. You would say just take it, don't let it continue to sit vacant. Well in the Landlord's head, if they accept that with 3% increases over 10 years, that's a difference of $137,000 about. That works out to about 27 months of rent difference, meaning they could let the store sit vacant for over 2 yrs, and if they eventually get that $5,000/mo they would break even. If it takes them a year, then they come out way ahead. Obviously you have to account for the present value of collecting rent and the chances that the business goes under in that 10 yr period, but that gives you a snapshot.
Then there's the psychological component. When you've waited 6 months and the space is still vacant, the same math still applies (the 6 month period is now a sunk cost). For some landlord's, the 6 months was an educational period of learning the market, for others, they hold onto the logic described above.
Posted by: Shoots and Leaves at November 23, 2009 10:01 AM
"Expert...are you interested in pursuing something???"
Dave, Thanks for the info. And yes.
I was in both nabes this weekend.
I was on Lewis and saw the empty fronts you mention. It seems like a very small strip or retail however. I also was on Stuyvesant. I didn't notice those, but I'll be back in the area.
On Nostrand in Crown Heights, I noticed a lot of closed stores. Not sure if they were closed cause it was Sunday or they were out of business. Is it common that stores are closed on Sunday on Nostrand? Anyone?
Also there were a few empty storefronts on Franklin Avenue.
Posted by: Expert Textpert at November 23, 2009 10:03 AM
Thanks, Shoots and Leaves. Also, could you please dispel the myth about the tax deduction for the empty building...I think you can deduct certain on-going expenses, but nothing like the amount of rent that would be due, correct? Thanks!
Posted by: jessibaby at November 23, 2009 10:05 AM
"How would you like to have a street full of typewriter repair shops"
I'd love to see one, along with a candlemaker and a ship chandlers, whatever that is.
Posted by: dittoburg at November 23, 2009 10:08 AM
Expert...I'm still working to revitalize the idea of Butternut Market in Bed Stuy...it would be a cross between the likes of Choice/Choice Market/Provisions/Chop Chop. There are a few interested parties, some with money.
Posted by: daveinbedstuy at November 23, 2009 10:09 AM
I won't claim to be an expert on the tax benefits, but I can tell you I've never worked for a Landlord or heard of a case of someone who wanted to let their property sit vacant.
Also, we will never see rent stabilization for commercial tenants.
Posted by: Shoots and Leaves at November 23, 2009 10:10 AM
The Daily News knows nothing - an article about a restaurant across the street from this former video store supposedly represented the depressed state of restaurants. However the restaurant was no damn good.
*100% Indisputable*
Posted by: 100 Percent Indisputable at November 23, 2009 10:12 AM
I'll throw a small caveat out there, some Landlord's are just downright irrational.
Posted by: Shoots and Leaves at November 23, 2009 10:14 AM
Dave, you definitely should. The area is under served. I need to figure out how much all this is gonna cost and I might dive into something myself.
Take this to the OT, I'm sure no one cares about our business ventures.
But if anyone else can answer the retail questions I have, please do.
Posted by: Expert Textpert at November 23, 2009 10:14 AM
Fair enough, S&L, gotta figure Landlords would mention the tax issue in their decision-making process if it were a factor. Thanks.
Posted by: jessibaby at November 23, 2009 10:14 AM
A ship chandler was a store that sold provisions to private seagoing vessels; everyting from dishes to rope to compasses.
Ruth Messenger flirted with the idea of commercial rent control back whenever it was that she made a run for Mayor. She crashed and burned. Her timing was off because the city at the time was veering away from the political far left.
Posted by: Minard Lafever at November 23, 2009 10:18 AM
Man, I wish someone would open a Ship Chandlers. I could get me some hard tack. With weevils.
Posted by: dittoburg at November 23, 2009 10:20 AM
"they own the storefronts, they can do what they want with them, and if it doesnt make sense financially for them (the owners) what can you really do about it?"
Rob is right on the money on this, as is Shoots and Leaves at 10:01. The landlord is in business, and sometimes it's shrewder economically speaking, to wait things out. The landlord's first responsibility is to his/her business.
Posted by: East New York at November 23, 2009 10:25 AM
Greedy???? I'll tell you what's greedy - I go into restaurants and stores all over Brooklyn and when I want to buy something, these slimy storekeeps, want to sell it to me at some ridiculous price that they post on the side of the package or menu. And you know what...I can buy alot of this stuff cheaper elsewhere OR alot of the stuff I dont even need it that bad.
Can you imagine that these slime balls would rather keep the merchandise on the shelves than sell it to me for a price I WANT to pay???
I think there is some tax incentive for these storekeepers/restaurateurs to not sell at lower prices....
They should have a price control law...that would lower prices by 20% and prevent stores from raising their prices more that 1% a year!!!!
Posted by: fsrg at November 23, 2009 10:35 AM
The landlords are owners and masters of their properties and can do what they wish with them. The only thing I hope doesn't happen and it would make me very mad, is if commercial real home owners start doing what the residential homeowners did. And that is first they bought at inflated prices and then start crying they could not make monthly payments so the government steps with our money to subsidize inflated home prices.
Posted by: hannible at November 23, 2009 10:36 AM
Greedy??? You know who is greedy - these damn workers - you know I went to hire a manager for my business and I offered this unemployed guy 25K a year (plus a $500 a yr stipend for health insurance) and this guy turned me down!!!
Can you believe this greedy SOB would rather not work than collect a legitimate paycheck!!!!
Maybe we should have a law that controls the price someone can charge to work! and then limits their increases every year to 1%! That way I can hire more people!
Posted by: fsrg at November 23, 2009 10:39 AM
5th Avenue in Park Slope, between Union and Berkeley - there's a neighborhood pizza shop that closed almost 2 years ago (Feb 2008) - nothing has replaced it, and you're talking about one of the busiest corners on Fifth avenue.
Anyone know the story behind that one?
Posted by: swngnmonk at November 23, 2009 10:41 AM
Somebody pissed off fsrq.
Posted by: East New York at November 23, 2009 10:41 AM
WELL SAID Minard, The government forcing private owners to subsidize residential housing has unwillingly contributed to a crisis in affordable housing. To even think about doing the same for commercial establishments borders on madness.
A landlord should have a right to be a greedy, shortsighted idiot.
Ironically, high rents in Manhattan have made many business incl. young chefs to set up shop in Brooklyn. The market isn't perfect, it sucks when a well patronized, long time butcher has to give way to another bank or chain store but the alternative of Forcing LL's to subsidize potentially mediocre businesses is worse.
Posted by: Crownlfc at November 23, 2009 10:41 AM
Greedy!!! You know who is greedy these sleeze ball condo/townhouse and Coop owners - You know I wanted to buy a 4 story Brownstone on 1st Street (btwn 8th and the Park) and I offered the seller $400,000 (U.S.!!!!) and the guy refused to sell - the greedy SOB didnt even make a counter offer. He'd rather keep the house empty then sell it to me for reall hard-earned cash! Can you beleive that!
They should pass a law that ties house prices to income - and prevent any home for selling for more than 15x the average faimily income of the U.S. - that way everyone could afford a home!
Posted by: fsrg at November 23, 2009 10:45 AM
Ah, I can relax today. It's my buddy FSRG's day to rant.
Go get 'em!
Posted by: benson at November 23, 2009 10:45 AM
fsrq...that generous $25,000 you offered is not that much more than my illegal Mexican bf makes.
Posted by: daveinbedstuy at November 23, 2009 10:46 AM
ENY- what me??? pissed no not at all, you mean you dont think my legislative suggestions are good ones???? I cant imagine why not
Posted by: fsrg at November 23, 2009 10:46 AM
Expert, Crown Heights' main commercial drag is Nostrand Ave. As has been reported here before, most of it, between Atlantic and Eastern Parkway, is owned by about 3 landlords, who charge very high rents, and seem to be ok with the status quo. It's going to take a lot of time, and concerted effort to make it here. I personally think there is plenty of room for old business and new to co-exist. As you know, Franklin is doing well, amazing, actually, but it would be naieve to not think that much of that is due to its proximity to Pros. Hts, and a great deal is due to the newer, younger crowd moving into the old Jewish Hospital area. Classon is coming too, but the street is a mix of commercial, residential and lots of institution, schools, churches, old age homes, etc.
New York and Brooklyn Avenues are 99.9% residential, leaving Kingston and Albany, which are seen as too out there and "fringe". Too bad, as Kingston has the commercial architecture, and some really great individual spots, and could be even better than Franklin. It is also a mix of residential and commercial, with some social service entities scattered along the way. Unfortunately, much of the residential is abandoned or in awful shape. There are a couple of brave souls opening new businesses on Kingston. The revitalization of the old Kingston Lounge would aid this progress tremendously. St. John's, between Brooklyn and Albany also has retail possibilities, and with the opening of the new apartments there, which really look nice, this could be a smart mini commercial enclave as well.
If I had big money, I'd put it on Kingston. It will be a long term investment, but worth it in 10-15 years.
Posted by: Montrose Morris at November 23, 2009 10:47 AM
is it fsrq or fsrg?
Posted by: dittoburg at November 23, 2009 10:48 AM
"Somebody pissed off fsrq."
Not difficult, but I agree with him in this case.
Posted by: etson at November 23, 2009 10:50 AM
DIBS - EXACTLY! and your BF is working, meanwhile these GREEDY disgusting Americans would rather sit at home, than earn TWENTY-FIVE LARGE working 60hrs a week for me! I'm telling you we could just pass a law that limits how much they can charge employers and all our problems will be solved!
Posted by: fsrg at November 23, 2009 10:51 AM
I could never tell that either, ditto. I assume it's FSRQ
Posted by: daveinbedstuy at November 23, 2009 10:51 AM
G
Posted by: fsrg at November 23, 2009 10:52 AM
I've owned a small storefront in Park Slope for a few years; previously I owned some multi-family property. The commercial rental market is a much, much slower one than the residentail. It has always taken me some time (6 - 9 months) to find a tenant. I set the rental rate at an amount that just covers my costs and allows for a modest profit (+/- 10%); it's on par with average asks in the area. Due to re tax hikes, my narrow margins are getting tighter. I would add that there are alot of flakes out there looking to rent commercial property - think bi-polar people in their up mode. I have shown my place to number of people that I think would have a hard time finding a regular job. I've also met people that think I should be charging the same rent the space went for in 2000 and have whined at me about it and then said they really wanted the space - no way am I ever renting to someone who argues and complains before we've even hammered out a deal.
Posted by: bessie2 at November 23, 2009 10:53 AM
"I set the rental rate at an amount that just covers my costs and allows for a modest profit (+/- 10%)"
Bessie;
Now you may claim that this margin is "modest", but have you checked with the rocket scientists at the Daily News??? I dunno, this may qualify as "greedy" in their book ;-)
Seriously, your post is right on point. Well-said.
Posted by: benson at November 23, 2009 10:59 AM
"is it fsrq or fsrg?"
Yeah, thanks I wanted to know that myself! And I get your point, fsrg. You're right. "Greedy" is a ridiculous word to use in this instance. The LL has the right to charge (or not charge) whatever he/she wants. To even discuss legislating the open market is, to me, ludicrous.
Posted by: East New York at November 23, 2009 11:00 AM
Does anyone who lives in Williamsburg know if Houndstooth closed??
Someone yesterday told me that it did, and I was shocked.
That was literally the best shop in Billyburg and it's only been open a little while. It got a lot of press. Someone told me the Paul Smith in Williamsburg was about to close soon too.
Two storefronts that I know about on 5th Avenue will hopefully not be empty for too much longer. The building near 5th and Bergen which housed the now closed Flight 001 is in contract as is the building 2 or 3 doors down. Hopefully the new owners will make a push to fill those 2 storefronts. But yeah, there are some which have been closed for A WHILE!!
Mr. B...I was kinda thinking this video store above might be where you were considering the indoor Flea this year...no?
Have you checked out the former Hollywood Video spot on 5th Avenue and like 8th Street? That's a rather large spot too...
Posted by: 11217 at November 23, 2009 11:08 AM
Thanks Montrose! I was hoping you'd chime in. I'm disappointed to hear about Nostrand and the landlords asking exuberant rents. I have a few numbers and will inquire regardless just to get a price range.
I agree about Franklin. I don't consider it part of Crown Heights. While I liked Franklin, I'd rather be IN crown Heights or Bed Stuy.
Kingston and Albany are fringe??? Really??? As in not appealing physically or on the outskirts of the area? I consider those streets to be in the heart of Crown Heights.
Kingston I think has lots of potential (it's a subway street). I'm going to go back and do some further investigating. I didn't take much note of St. John's for commercial but will on my next trip.
Thanks again for all the thoughts.
Posted by: Expert Textpert at November 23, 2009 11:08 AM
Everything that fsrg said.
Posted by: lechacal at November 23, 2009 11:09 AM
"There are a couple of brave souls opening new businesses on Kingston."
I agree Kingston has nice potential. But you know, I'd prefer if it did NOT become a huge retail street, with lots of foot traffic, which I think would hurt the (mostly) quiet character of the neighborhood. Some improvement would be nice, but if it's at the expense of the street turning into something like 5th Avenue in the Slope, I wouldn't like that.
Posted by: East New York at November 23, 2009 11:09 AM
11217 - Wine Lover told me houndstooth closed but something infinitely more fabulous is opening there, and there is no need to be alarmed.
Posted by: dittoburg at November 23, 2009 11:12 AM
That's too bad, Ditto. I actually really liked Houndstooth a lot. Got some great stuff there.
Posted by: 11217 at November 23, 2009 11:15 AM
Expert Textpert-Nostrand gets a lot of foot traffic and some of the businesses are closed on Sundays. But several businesses have opened and closed shortly thereafter but truthfully from what I saw, they seemed to have spent all their money on opening and not looking past that to actually operating day to day. Most of them had strange hours, or weren't open regularly. The family owned drugstore, that should have done well, was so forbidding no one would want to go in. They had their racks up front, and the window was partially closed off. You could barely see in. If you are that afraid of your customer base, you won't get one.
The Ibo Lounger was only open a few nights a week, and had big velvet curtains closing off the view. Again- no one went in. But that space had been redone and quite nicely.
We thought it was going to be a nice little restaurant but then it became a "lounge." It's now empty.
People in the neighborhood are screaming for coffee shops and nice places to eat. Franklin is nice but its not that convenient to my section of CHN. I don't think Kingston gets the same foot traffic as Nostrand, but there is a spot on the corner of NY and Atlantic that used to be a salad bar/food bar and is now empty.
Posted by: bxgrl at November 23, 2009 11:17 AM
I think most people contemplating opening a small business don't give enough thought to the fact that they may not make any money for a year or two and don't have a large enough cash cushion to pay the bills for two years. Many aren't savvy enough to put together an income and cash flow statement and use it to figure out the profitability or lack thereof of what they are trying to do.
Posted by: daveinbedstuy at November 23, 2009 11:20 AM
A landlord has the right to charge whatever s/he wants. And I have the right to think s/he is greedy. Last I checked, calling someone greedy is not synonymous with calling for commercial rent regulation.
Something to think about....the more vacant storefronts (while waiting for exorbitant rents) the more blighted an area appears and often becomes. All the greedy landlords that want to sit and wait it out as Shoots and Leaves explained, you never know, depending on where it is, you're vacant storefront (and those of your fellow greedy landlords) could end up making sure you can only get an even lower rent.
Posted by: aysataba at November 23, 2009 11:22 AM
11217 - I don't want to mislead you, I actually know nothing about it. I just wanted to trump how "everything in 11211 is great no matter what happens", a la wine lover.
Posted by: dittoburg at November 23, 2009 11:23 AM
Haha, ah ok Ditto. Got you! :)
Haven't seen wine lover in a while. He must be at Marlow & Sons right now.
Regarding the vacancy issue, someone once told me that landlords actually do better keeping storefronts closed because of some tax issue. Anyone know anything about that?
Posted by: 11217 at November 23, 2009 11:33 AM
Every time I drive up & down Flatbush it saddens me to see all the empty storefronts. I mean from Flatbush when you get off the Manhattan Bridge all the way down to by Kings Plaza, you can count at least one storefront for rent on each block.
These landlords kill me. They rather receive no $, then get some $. I understand we are in a recession, but we're not going to be in a recession forever. I know LLs complain about the raising cost in taxes, water/sewer, insurance, so on & so forth, but I know LLs can put a clause in the Lease to state that the rent will raise to "x" amount to cover those costs.
I'm going to be a landlord. When I am a LL, I will work with my tenant to keep them in the space because renting a commercial space is so much harder than renting a residential unit.
Posted by: Miss Breukelen at November 23, 2009 11:33 AM
aysataba - you are correct calling commercial landlords greedy does not = calling for commercial rent control, except commercial rent control was brought up here separate from the term greedy AND Commerical Rent Control isnt some fantasy fear in NYC - See City Council Bill 847a which is ONE vote short of being passed OVER a Bloomberg veto - and includes supporters such as Bill Diblasio, Bill Thompson and John Liu (in other words potentially our next mayors)....
decent summary of bill is here:
http://www.brooklyneagle.com/archive/category.php?category_id=6&id=29197
As for the term greedy you are free to use it against anyone you want - and I am free to call you an f'in moron - but I wont, because although I could...it isnt polite
Posted by: fsrg at November 23, 2009 11:35 AM
"Regarding the vacancy issue, someone once told me that landlords actually do better keeping storefronts closed because of some tax issue. Anyone know anything about that?"
Yes it is 100% false
Posted by: fsrg at November 23, 2009 11:36 AM
fsrg, the "Small Business Survival Act" is a far cry from commercial rent control.
Posted by: daveinbedstuy at November 23, 2009 11:40 AM
Landlords do indeed think of their property as investments, and yes they have the right to do with it as they please. On the other hand, neighborhoods suffer when businesses are forced out , people suffer, the economy suffers. If the recession taught us anything it is just how interconnected all of these things are so why don't we try to figure out ways that this can be turned to everyone's benefit? Because if a landlord does everything not to have a tenant, it begs the question. "Why?" What could possibly make it more advantageous to not have a tenant for a commercial property?
Posted by: bxgrl at November 23, 2009 11:45 AM
11217;
That "landlords would rather keep the stores vacant to reap some tax benefit" is an old canard promulgated by the rent control crowd. I know this because my wife has an aunt and uncle who are heavily-involved in the rent control cause, and they constantly spout this line, no matter how much you try to show them it is false.
The idea they're trying to promote is that commercial andlords are "greedy" both coming and going. If the store is occupied, they're gouging on the rents. If it is empty, they're still making lots of money, due to the tax benefits. In summation (according to this crowd): landlords are inherently greedy bastards, and commercial rent control is the only answer.
Unlike FSRG, I'm not polite, so I'll say that my wife's aunt and uncle are economic morons (otherwise, they are really nice people).
Posted by: benson at November 23, 2009 11:45 AM
Really DIBS - it is EXACTLY commercial rent control - have you read the proposed legislation
Posted by: fsrg at November 23, 2009 11:52 AM
fsrg...it's an arbitration methodology. It's not even "binding arbitration." You're wrong.
Posted by: daveinbedstuy at November 23, 2009 11:59 AM
Please lets not only call commercial landlords greedy and forget about those wonderful super-greedy residential homeowners who invented the word greed.
Posted by: hannible at November 23, 2009 12:03 PM
From 1945-1963, New York State law provided strong protection for small businesses in the City through commercial rent regulation. The Small Business Survival Act eschews such major government intrusion in the marketplace, instead returning the commercial lease renewal process to one-on-one negotiations between the two parties.
Posted by: daveinbedstuy at November 23, 2009 12:03 PM
Please lets not only call commercial landlords greedy and forget about those wonderful super-greedy residential homeowners who invented the word greed.
Posted by: hannible at November 23, 2009 12:03 PM
I was wondering how long it'd take this idiot to rear its ugly head.
Posted by: daveinbedstuy at November 23, 2009 12:05 PM
"What could possibly make it more advantageous to not have a tenant for a commercial property?"
- Commercial leases are generally for long term - no one is going to risk $$$ opening a business only to have to have to close it again in a few years because the lease xpires or needs to be renegotiated.
-If I rent a storefront or office today for a very low rent because the economy is tanking or confidence is low, I am stuck with that rent for likely a decade or more.
-If I financed my property, I may have done so based on older (higher) rents, therefore even if I accept lower rent today and make all my payments, when my mortgage comes due (Commercial Mortgages generally ballon after set period), I may not be able to refinance it for the same amount (since value is tied to RR)-therefore I'll be "underwater" and I may lose the property (and all my equity with it).
Therefore a LL must make a bet over the lifetime of any prospective tenancy - I am better-off renting today at $X or waiting till later and renting at $Y....
Its really not that complicated and greed doesnt enter into it on the LL side anymore than it does on the tenant side - since after all, both are in it for a profit!
Posted by: fsrg at November 23, 2009 12:10 PM
DIBS - it is effectivly binding on the LL!
Here it is, decide for yourself
http://legistar.council.nyc.gov/ViewReport.ashx?M=R&N=Text&GID=61&ID=485891&GUID=535B8426-7F2B-4EB3-9491-43468E713F1F&Title=Legislation+Text
And BTW - nothing will destroy Small businesses faster in NYC then this legislation, cause if you think Chains have an advantage now, just wait till this passes - no LL in his/her right mind would ever rent to a new independent business again.
Posted by: fsrg at November 23, 2009 12:13 PM
Its really not that complicated and greed doesnt enter into it on the LL side anymore than it does on the tenant side - since after all, both are in it for a profit!
Posted by: fsrg at November 23, 2009 12:10 PM
Well said.
Posted by: daveinbedstuy at November 23, 2009 12:13 PM
"fsrg...it's an arbitration methodology."
Yup just like the RSA.....
Posted by: fsrg at November 23, 2009 12:15 PM
It's non-binding.
Go back and read the friggin post that YOU posted.
Posted by: daveinbedstuy at November 23, 2009 12:18 PM
I realize all that, fsrg. What I'm most concerned with are commercial landlords who have long term tenants whom they drastically raise the rents on, forcing them out. I saw the garment, trim, bridal and flower districts go through this- to name but a few. All of those businesses were economic engines across the city and the country. Yes, there were many other factors in the changes. But that was a huge one. The effects were wide-reaching, whereas today there is more money concentrated in fewer and fewer areas. As the economic benefits contract, so does our ability to create jobs and decent living conditions. We seem to be an every man for himself kind of place, and that is terribly short-sighted.
Posted by: bxgrl at November 23, 2009 12:35 PM
"storefronts that have seemed to sit vacant long time on Smith St."
Pete, there have never been any vacant storefronts on Smith Street! ; )
Posted by: CarrollGardened at November 23, 2009 12:39 PM
DIBS - Your reading comprehension leaves a bit to be desired.
The legislation works like this
1. Commerical Tenant has RIGHT to renew lease at expiraration
2. LL MUST renew unless certain exceptions (chronic non-payment, usuage in violation of existing lease, plans to use space for him/herself....)
3. If LL agrees to renew and no agreement on rent then goes to arbitration (which considers such factors as PAST rent - the longevity of the tenants business, the location of the buisness, the rate of return on Treasuries....)
4. If LL DOES not agree to renew based on exemption (must otherwise because renewall is a RIGHT)- then there is arbitration on validity of LL's claim of exemption and assuming exemption is not valid then Tenant can have Arbitration on rent level - since renewall is a RIGHT)
5. The decision on RENT LEVEL is binding - EXCEPT the tenant does not have to renew - which makes it binding on the LL and NOT binding on the tenant - since you are having trouble understanding here is the ACTUAL tect from the relevant section:
(f) The arbitrator's decision setting the rent price shall be final and binding on both parties except as
provided herein, and they shall enter into a lease incorporatingsuch rent which lease does not diminishany
services provided by the landlord pursuant to the existinglease. Such renewal lease shall be entered into by the
termination date of the current lease and shall commence at the time of expiration of the existing lease. If,
however, the tenant elects not to pay the rent set by the arbitrator, then the landlord and tenant shall not enter
into a new lease agreement or renew the existing lease.
(g) If, pursuant to subparagraph 3(f) of this subdivision, the tenant elects to not pay the rent set by the
arbitrator, the tenant will be allowed to remain in possession at a rent no greater than a five percent increase of
the average rent charged during the final twelve months of the last rental agreement between the landlord and
tenant from the terminationdate of the existinglease untilsuch date on which the tenant shall remove his or her
property from the premises as provided herein. In the event the landlord receives a written bona fide offer from
a prospective tenant to rent the premises, the landlord must first offer the current tenant the option of entering
into a lease at the rent and other terms agreed to by the prospective tenant to the landlord. The landlord is to
notifythe tenant of such offer withinthree days of receipt of such written bona fide offer. If the tenant declines
to pay the rent or fails to accept the offer within fourteen days of receipt of the landlord's notificationto the
tenant of such offer, then the tenant has thirty days, from the date such notice is received, to remove property
from the commercial premises provided that the lease has expired. If the tenant accepts the option of first
refusal, the landlord and tenant shall enter into a lease based upon the terms of the bona fide offer received by
the landlord from the prospective tenant.
Posted by: fsrg at November 23, 2009 12:40 PM
I read the summary in the link.
With that type of wording, it's no wonder it didn't pass.
Nor will it. Landlords are a more powerful group than small businesses when it comes to these matters.
Renewal is not a RIGHT and never will be.
Not sure how much experience you have with commercial leases but it's not like they are a fixed a mount anymore over the life of the lease. They do go up every year. Also, they cover any increase in RE taxes
Posted by: daveinbedstuy at November 23, 2009 12:50 PM
And, here's the loophole....
"In the event the landlord receives a written bona fide offer from a prospective tenant to rent the premises, the landlord must first offer the current tenant the option of entering into a lease at the rent and other terms agreed to by the prospective tenant to the landlord."
Posted by: daveinbedstuy at November 23, 2009 12:55 PM
DIBS - the legislation didn't "not pass" it wasnt voted upon cause they dont have the ONE vote they need to pass over a promised Mayoral veto (if Thompson was Mayor it would pass)
and I have alot of experience with commercial leases and yes most have clauses for escalations (not all btw) and many cover taxes (like proportion of water or RE etc, again not all)
but this legislation would take all these negotiating issues out of the hands of the parties and have arbitrators dictate the rent to LLs (tenants could still chose not to renew) - if this isnt rent control than what is.
BTW - Ill take your last post as acknowledgment that I am RIGHT...the proposed legislation makes the arbitration binding on LL (wonder why you didnt make your error more clear? hmm)
Posted by: fsrg at November 23, 2009 12:59 PM
Another good reason Thompson isn't mayor. And i'm not a commercial landlord.
This kind of shit is foolishness. The loophole will be easy to slip through.
Posted by: daveinbedstuy at November 23, 2009 1:02 PM
Dibs;
You call that a loophole?? I think not. It gives a right of first refusal to the current tenant, based upon CURRENT market offers. If I'm reading it right, therefore, it takes away the landlord's ability to just not rent the place at all, and wait for market conditions to improve.
Posted by: benson at November 23, 2009 1:02 PM
Thats no loophole!!! read it closely - the Arbitrator renders a decision on the rent - the tenant refuses to re-sign at the arbitrated rent, the tenant is then ALLOWED TO STAY at a rent = no more that 5% greater than the final rent of the leasehold UNLESS there is a "bona fide" offer from a third party - therefore the existing tenant can arguably stay forever (at a 5% escalation) over the objection of the LL UNLESS some other prospective comes out of the woodwork. Some loophole!
Posted by: fsrg at November 23, 2009 1:05 PM
I think that a landlord will be able to secure a bona fide "offer" at a higher price one way or another. He doesn't care who he's renting it to as long as he gets the price.
It doesn't have to be a rental contract, just an "offer." that won't be difficult.
I've never seen something written so bizarrely that it won't be gamed. This'll be ripe for gaming and it'll be to the landlords eventual advantage.
Posted by: daveinbedstuy at November 23, 2009 1:08 PM
The bona fide offer won't be hard to come by is what I'm saying. It doesn't have to result in an actual lease, just an offer.
Arguing about this is foolish. It won't happen. Basing the passage of this legislation on somebody like Thompson winning is a fool's game.
Even if it did get passed it'll be held up in court appeals for decades.
Posted by: daveinbedstuy at November 23, 2009 1:11 PM
Additionally, most tenants at some point have usage issues that are in violation of the existing lease. They will be small points but still in violation.
Lease language will get tougher and rent escalations higher if this were ever to happen, again, hurting the tenant the most. Do the proponents of this bill not see this???
Posted by: daveinbedstuy at November 23, 2009 1:15 PM
DIBS -
your discussion techniques are interesting
1st you say - it is non-binding
then you are shown to be wrong and you say - well there is a loophole anyway
then you are shown that the loophole is no escape and you say - well the whole thing is worded badly so the LLs will be able to game it to their advantage
and finally you say, none of it matters cause - it will be tied up in litigation no matter.
You know it would be alot less painful if you just said - FSRG you are right, this bill does amount to commercial rent control and I am opposed to it.
Posted by: fsrg at November 23, 2009 1:17 PM
Expert, I was in a hurry this morning, and left out Rogers and Bedford. Both are a mixture of residential and commercial, but both have some strong possibilities for growth in pockets, especially between Sterling and Dean. The Grant Square area could be a goldmine if done right, so I'd also look there, if I were you. I'd be interested in talking about it further, if you are. Please email me:montrosemorrisATyahooDOTcom.
Posted by: Montrose Morris at November 23, 2009 1:28 PM
fsrg, you're original link said nothing about binding. that's what I read. YOU provided it.
I still say the loophole is an escape. It was benson who said it was not. It is an escape.
Additionally I pointed out that there are always minor violations to every lease. These will work to get the landlord out.
I am opposed to commercial rent control. This is not a socialist state.
I find it completely ludicrous, disengenuous and patently absurd that tenants who are in business to make money feel so self entitled that they shouldn't pay market rents.
Maybe you should also have the government pay into your revenue stream when the crap you are selling or the service you are offering falls short of what the market desires.
That would get us to what the others have been talking about...a block full of crappy retailers that nobody wants.
Posted by: daveinbedstuy at November 23, 2009 1:28 PM
I've also seen lots of tenants offer to sell their failing business at huge amounts of money just because what they are actually selling is the remainder of a below market lease.
Typically that never pans out!!!
Posted by: daveinbedstuy at November 23, 2009 1:31 PM
DIBS -
"fsrg, the "Small Business Survival Act" is a far cry from commercial rent control.
Posted by: daveinbedstuy at November 23, 2009 11:40 AM"
Really DIBS - it is EXACTLY commercial rent control - have you read the proposed legislation
Posted by: fsrg at November 23, 2009 11:52 AM
fsrg...it's an arbitration methodology. It's not even "binding arbitration." You're wrong.
Posted by: daveinbedstuy at November 23, 2009 11:59 AM
Is it so hard for you to admit you were wrong????
Posted by: fsrg at November 23, 2009 1:33 PM
read my 1:28 post. How many time do I have to tell you that the original link that you posted is what I read.
Yes, it does read as binding in the detailed bill but that's not what you posted. Additionally, I have posted more than enough examples of how a landlord will get around these issues.
If you don't think leases are going to be written differently in the future to reflect the possibility of all of this (with higher rents) then you are living in a fantasy world.
Posted by: daveinbedstuy at November 23, 2009 1:37 PM
"Greedy Landlords Causing Storefronts to Sit Empty?"
Remove question mark.
Guys - follow the market down and get the damn thing rented. This economic depression we're in, and eventual REAL recovery, will take about a decade anyway. Lock in what you can today or be chained to even less tomorrow.
You have no idea.
***Bid half off peak comps***
Posted by: Brownstones Half Off at November 23, 2009 1:38 PM
re: commercial strips in Bed-Stuy, don't forget Tompkins Ave. There's a stretch near-ish Fulton that's got some quaint storefronts.
Posted by: herkimermaid at November 23, 2009 1:39 PM
herkimermaid....I'm talking my own book re: Stuyvesant & Lewis. I don't want to walk all the way over to Tompkins!!!
There have been a number of new shops that have opened there just recently.
Posted by: daveinbedstuy at November 23, 2009 1:41 PM
of course the other side of the coin are landlords who make it impossible for a tenant to make a go of business because everything goes toward rent. It's one thing to say they shouldn't be in business because their stuff is crap. It's another to lose sight of the fact that the market for retail may not be the same as the market to real estate. And because many small businesses offer services and items that are necessary but do not create retail at the same level as a chain retailer. There used to be a number of companies in the garment center that catered to sample makers or small garment businesses. They were successful, but not making money at the level desired by a landlord.
how about a little balance in these things? Small businesses are important to the economy. They used to be the engine that ran the economy. Charging what the market will bear is a lovely mantra but in view of the economic realities these days, it seems to be doing quite a lot of harm as well.
Posted by: bxgrl at November 23, 2009 1:49 PM
DIBS - LLs wont "get around this", they'll just take on another cost - litigation and then either have tighter margins and/or greater losses or if the economy rebounds they'll pass the cost on to new "initial" tenants.
What you call a loophole or a "way around" is really equal to tens of thousands of dollars trying to negotiate through the mess that is NYC LL/Tenant court. in other words one way or another this bill (or one like it) will significantly impact the value of NYC property.....now before the rest of you go celebrate and say - thats great - while NYC commercial rental property will be worth less, the price of entry will be significantly higher. Essentially the only properties that will be open to new leases by independent buisnesses with less than 100 employees, are locations that are un-rentable to larger business, and the rents in these undesirable locations will be even higher (to cover the added admin costs).
And lest you think that this bill is only for retail stores, think again - it applies to offices, warehouses, professional space, even cultural space.
Think I'm going to rent my office space to a mid-size accounting firm, think again (or if I do it will be at a much higher rent), Think I am going to rent my loft to that new start-up - think again.
They ought to have named the bill the Small Buisness Stagnation Act - its great for existing small businesses with a leasehold that never want to move - for every other independent business with under 100 employees or new one contemplated - its death.\
Posted by: fsrg at November 23, 2009 1:52 PM
I agree with you bxgrl that small businesses are important to the economy. They are very important.
However, that does not absolve the business owner from poor decisionmaking. No one puts a gun to their head to accept a certain rent when they sign their lease.
I think, at the end of a 10-15-20 year lease, if the place is way under market, the landlord should get a fairer rent. The tenant has most likely reaped the benefits of a below market lease for a good period of their tenancy. Why is that fair???
If the landlord is too pigheaded to understand his property is not worth what he thinks it is then he will pay the price. yes, it's unfortunate that the tenant is now without the space that would have been mutually beneficial to both parties but, that's capitalism.
Anyone with a lease that they got in the early to late 90s is now most likely, paying well below market, even after a correction here.
Posted by: daveinbedstuy at November 23, 2009 1:56 PM
fsrg, from your 1:52 post it would seem that we are in agreement. Yes, leases will become incredibly onerous for new tenants.
This is typical of government interference with free enterprise.
Posted by: daveinbedstuy at November 23, 2009 1:58 PM
In London, since April of '08, commercial property owners have to pay a special tax for leaving their properties vacant more than 6 months. The goal is to encourage rent reductions that would make London more competitive with other EU cities whilst also improving access to premises for new and existing firms. And generate revenues for the Treasury!
Posted by: grand army at November 23, 2009 2:00 PM
"I find it completely ludicrous, disengenuous and patently absurd that tenants who are in business to make money feel so self entitled that they shouldn't pay market rents."
DIBS, it's not the current market price if nobody will pay it. I've heard stories about restaurant owners trying to find a space to rent in our neighborhood but finding rents absurdly high. Which keeps our amenities scarce here. I've heard stories from my hair stylist when her landlord tried to increase her rent four fold. The problem is Brooklyn landlords are asking for the rent they think the space will be worth 5-10 years from now when they sign long commercial leases. The boom in Brooklyn got them overexcited and greedy. Their speculation is often based entirely on talking to non-expert cronies, not knowledgeable, practical people and they aren't taking the recession into account; they're a bit in denial. Ironically the blighted empty storefronts make all that progress and increase in value they speculate will happen not happen. Most these landlords lucked into buying these buildings a long time ago and aren't geniuses. Clearly.
Posted by: traditionalmod at November 23, 2009 2:02 PM
traditionalmod, you're right. The biggest problems are in the least developed neighborhoods where the building owners oftentimes have a near ZERO cost of ownership but have no money to improve their properties. They also seem the most out of touch with prices because "comps" are scarcer.
Posted by: daveinbedstuy at November 23, 2009 2:06 PM
"The problem is Brooklyn landlords are asking for the rent they think the space will be worth 5-10 years from now when they sign long commercial leases."
True and tenants are only willing to pay rent based on today's market -
and the savvy people who can come to an agreement in the middle (and are correct) will be successful, and the ones that are too speculative/unrealistic to reach a deal are doomed to failure - that is business - and neither side is anymore "noble" or any less "greedy" than the other....
Posted by: fsrg at November 23, 2009 2:18 PM
Bxgrl - "how about a little balance in these things? Small businesses are important to the economy. They used to be the engine that ran the economy. Charging what the market will bear is a lovely mantra but in view of the economic realities these days, it seems to be doing quite a lot of harm as well."
There is balance in these things - it is however a constantly changing "balance" - the vacancies will inevitably lead to lower rent, lower rent will lead to more business, more business will lead to higher rents, and so on and so on.....
Rather than being a bad sign, vacancies are the best news in years for people looking to start small businesses - and as nice as they may be - Royal Video (for example) is hardly going to be an engine of new jobs - no matter the rent.
Posted by: fsrg at November 23, 2009 2:26 PM
Do people still go to video stores????
Posted by: daveinbedstuy at November 23, 2009 2:31 PM
See what you have done Alan Greenspan and Ben Bernanke. With your low interest money policy you have turned every Joe into a potential bussiness man that knows everything. When are interest rates going up so it will put an end to this nonsense?
Posted by: hannible at November 23, 2009 2:43 PM
Great reading!
And thanks Dave, bxgrl, MM and herkermiad for answering my questions.
MM, I will email you after I figure out if we can financially do this without spreading ourselves too thin.
Posted by: Expert Textpert at November 23, 2009 2:49 PM
DIBS - only ones with glory holes
Posted by: dittoburg at November 23, 2009 3:05 PM
Those are different, ditto. they provide a service you can't get over the internet.
Also, they are now referred to as "buddy booths" and operate electronically.
Posted by: daveinbedstuy at November 23, 2009 3:09 PM
fsrg- yes, but a lot of small businesses create a lot of jobs and money. Maybe not individually, but as a whole. And its a lot healthier for the economy. (And yes, I agree that when the lease comes up for renewal things should be reconsidered. But many small businesses can't generate the kind of rents landlords want to get. One old time very famous bridal business, a successful one, had to close up when the landlord decided to raise their rent from 5000 to 30,000. As successful as they were, bridal trim and flowers, salaries, benefits and supplies also went up. There was no way they could stay in business with tht rent. And that story was repeated over and over again. I knew quite a few of the shops and owners- ask anyone who was in the industry, and they can tell all the great businesses that were driven out. Instead of working out increases everyone could live with, a lot of the landlords raised it to "market level."
While the video store may not generate a lot by itself, in communities that video store is only one of many businesses that serve the neighborhood. Businesses every neighborhood needs.
These threads always degenerate into finger pointing. Both sides need attitude adjustments and need to learn how to compromise or we'll all suffer. More than we already are.
Posted by: bxgrl at November 23, 2009 3:09 PM
"One old time very famous bridal business, a successful one, had to close up when the landlord decided to raise their rent from 5000 to 30,000"
Bxgrl;
Not for nothing, but this story doesn't hang together.
If the proprietor was any type of savvy business person, he or she would have been preparing for the lease renewal negotiation. Part of that preparation would have included scouting for alternative lcations, in case the current landlord asked for the moon. If they were indeed a successful enterprise, they could have moved without damaging their business. For example, Kleinfeld's was able to move, and their business is better than ever.
Posted by: benson at November 23, 2009 3:21 PM
And if the market rate really was $30,000 then there's no reason the landlord should be accepting anything as low as $5,000.
benson's right, that negotiation should have been started a few years in advance of the end of the lease if things were that out of proportion.
Posted by: daveinbedstuy at November 23, 2009 3:25 PM
Bxgrl - it is definitly sad when a longtime business goes out - but using your example - a bridal shop - I find it hard to feel sorry for a bridal shop owner who is hit by high market rate rents.
I only have been married once (thank god) and I could be wrong but based on the thousands (if not tens of thousands) that a bridal shop charges for the dresses - it seems to me that bridal shops certainly are familiar with the benefits (and downsides) of timing in a buisness transaction. And they appear (at least at 1st glance) to generate healthy margins based on that niche.
Now I may have bitched and moaned a bit at the time, but I do not begrudge the bridal shops for charging what they can, or accuse them of being "greedy" or preventing people from getting married or anything.
But just like a wedding, the lease expiration is an event that comes but once (or twice or 3x) in a lifetime and just like the future bride must budget and plan for her big day (or days) so too must the bridal shop owner who more than anyone knows how much you can charge when one waits to the last minute.
Point is - it sucks - but it is life
Posted by: fsrg at November 23, 2009 3:26 PM
Kleinfeld's deals in big ticket retail items- dresses and accessories. They were also never in a bridal "district." The businesses in the garment center were the wholesale suppliers who have to do much more volume to make up the money. Many of those businesses had been in their spaces for over 50 years with incremental increases over time. But they started getting socked with huge increases that drove them out. I used to be "in the business"- I knew the people, still know some that have managed to hang on. Once they were priced out of the trim district and bridal districts, customers didn't usually follow them to an out of the way location. It's a lot more than the cost of overhead. The bridal business was not growing fast enough to enable these old businesses to keep up with huge increases- that happened much more quickly. YOu should learn all the facts before you claim the story doesn't hold together.
Posted by: bxgrl at November 23, 2009 3:31 PM
fsrg- as I said to benson, this was a supplier. He also supplied the garment industry, floral industry, interior design industry and millinery industry. Your argument relates to Kleinfeld's, not this guy. Another thing is that a lot of the old time landlords were on good terms with their tenants. When ownership turned over to bigger RE firms, those new landlords had no attachment to or history with their tenants or area. They didn't care one way or another- and that is a shame.
Posted by: bxgrl at November 23, 2009 3:40 PM
Bxgrl;
I'm sorry, but what you are saying just proves my point.
If the owners of these businesses idid not understand that:
-they were in a slow-growing business;
-they were located blocks from a growing commercial office market district that commanded much higher rents, and made no plans to create a new "district" somewhere else;
they deserved to go out of business for lack of savvy.
The Fultion Fish Market moved to the Bronx and they're still doing well. Also, the food warehousing business moved years ago from the Navy Yard area to Canarsie, for the same reasons.
Posted by: benson at November 23, 2009 3:42 PM
grand Army- that is precisely what the city should do- empty commercial and residential units should be taxed while they are vacant (after a reasonable grace period). As the B'stoner rant goes, they're not making any more land, so the city has an interest in ensuring that all land is used to its greatest benefit. As pointed out above, empty store fronts can increase blight and they also deny the community added amenities. The cost for this should be taxed to the owners.
Posted by: orestes at November 23, 2009 3:42 PM
Bxgrl - "It's a lot more than the cost of overhead. The bridal business was not growing fast enough to enable these old businesses to keep up with huge increases- that happened much more quickly."
and so a slow(er) growing business can no longer afford prime real estate in the largest metropolis in the country....
2 choices - 1. Force LL and/or Govt to subsidize the industry until eventually the tighter margins and slower growth kills it off or 2. Let economics rule and have the industry adapt or die and have more growth oriented businesses take the RE and hopefully thrive.
Again - its sad & painful but its life.....there used to be a typewriter district and slide rule stores too.
Posted by: fsrg at November 23, 2009 3:43 PM
A business that can't make money paying market rent at a location doesn't belong at that location. End of discussion.
Posted by: lechacal at November 23, 2009 3:46 PM
orestes - it already is - property taxes are based on valuations which are based on RR. - and you pay the property taxes whether the store is rented or not
Posted by: fsrg at November 23, 2009 3:46 PM
Bxgrl is talking about a shop that catered to those retail bridal shops, this was a place that sold trimmings, tulle, lace, and other components of a dress, not the dresses themselves. So they weren't making the big bucks.
I think it's really easy for arm chair critics to sit back and say a tenant "should have" negotiated for a better rent, "should have" done this and done that. The reality is that people, especially those who have been in a location for 20, 30 plus years, have been dealing with running their businesses, mostly in the old fashioned way that went out with fedoras and running boards on cars; a landlord and tenant negotiated with a handshake, the expectations being that the landlord would keep up his property, and raise rents at a reasonable rate, while the tenant pays on time, and fulfills his other tenant obligations. While this is all going on, said tenant is building their business, so they can say they've been at a location for generations. Meanwhile, the world changes around you, and the landlord sells out to some deep pocket with nothing on his mind but profit, and boom, when a long term lease is due, the rent quadruples or more. That's the story of lots of businesses, especially in places like the garment center, an area which I am familiar with.
So I don't think it's quite fair to simply think a store owner is either stupid or just a bad business person. It's much more complicated than that in many instances.
Posted by: Montrose Morris at November 23, 2009 3:56 PM
"they were in a slow-growing business;"-
It was a business determined by the market. A thriving market and a district that generated jobs and money for the city.
"-they were located blocks from a growing commercial office market district that commanded much higher rents, and made no plans to create a new "district" somewhere else;"
Midtown was always an office space area, with thousands fo small businesses. Again- generating big bucks and jobs for the City. As for making plans to create a new district? The Fulton Fish market was forced to move to a market created by the City. Businesses in the trim and garment district were never given that option or help.
"they deserved to go out of business for lack of savvy." Mean-spirited, ignorant, shortsighted- you name it, you expressed it with this tidbit of unintelligence. Congratulations.
fsrg- we have a problem in this city of perceiving certain things to be valuable for the wrong reasons. Over the past year I've heard many people say NYC depends too much on the financial industry- and I agree. We've lost the broad economic base we had and the ability to create a broad range of jobs. It isn't healthy. Change happens- true. But change can also do more harm than good and I don't think the same old attitudes are going to help fix our very large problems. Just the way I see it.
Posted by: bxgrl at November 23, 2009 4:02 PM
"As pointed out above, empty store fronts can increase blight and they also deny the community added amenities. "
Hi Orestes;
I would argue that for some landlords, in some circumstances, leaving the stores vacant is precisely the right thing to do.
I'll give you an example with which I'm familiar: the Kings Highway stretch of Western Gravesend (this is where I grew up, and my folks still live there). During the last big real estate recession (early 90's) alot of the old-time businesses in this stetch went under. The owners of these properties were alot of old-timers who weren't that sophisticated. They all panicked because they didn't want their income stream interrupted, and many of them rented to cheap 99 cents stores. The effect on the neighborhood of having so many stores filled with these cheap 99 cents stores was pretty bad. The neighborhood went through a downturn. It would have been better if they had held out for better quality tenants.
Fortunately, this situation is now finally being improved. Bloomberg allowed Kings Highway to be upzoned, and alot of condos are being built there, with much better retail space on their ground floor.
Posted by: benson at November 23, 2009 4:04 PM
"So I don't think it's quite fair to simply think a store owner is either stupid or just a bad business person. It's much more complicated than that in many instances."
Totally agree - its called life - it is unfair....
Posted by: fsrg at November 23, 2009 4:04 PM
Hmmmm;
Mud-slinging has arrived!
Activate shut-down mode!!!
Good-bye!
Posted by: benson at November 23, 2009 4:07 PM
So, fsrg- by that argument, you shouldn't have anything to say if the City decides to pass commercial rent control, because, hey...life is unfair.
Posted by: bxgrl at November 23, 2009 4:10 PM
The only mud I see being slung is the mud generated by Benson's hasty retreat from an interesting discussion. A debate means opposing sides go back and forth on their points, not just make their pronouncements and get upset when the opposite side doesn't agree.
Posted by: Montrose Morris at November 23, 2009 4:30 PM
Montrose;
I have been in this discussion from this morning, with lots of back-and-forth. Please see my recent counter-point to Orestes.
This is the mud-slinging to which I was referring (from Bxgrl):
"Mean-spirited, ignorant, shortsighted- you name it, you expressed it with this tidbit of unintelligence. Congratulations."
If you call this an "interesting discussion" from which I should not have retreated, so be it. I'll take the rap.
Sayonara!
Posted by: benson at November 23, 2009 4:36 PM
Bxgrl - the Garment industry has had zoning protections for almost a quarter of a century - so its not like we (as a society through our Government) didnt value its role in our economy/culture etc....But the issue is as you alluded earlier - much bigger than RE costs and despite these protections (that prevented many factories from being converted to other use (and thereby kept their value otherwise lower) the Garment industry continues to shrink.
It is sad.
Now look at it from the perspective of (for example) a Web advertising startup business.
They would love to be in midtown - it is near the established "madison Ave", near tons of other media companies and would attract tons of talent from around the world. BUT alas with RE so scarce in midtown the only available leases are in Class-A (high priced) RE which our startup cannot afford. All the older (and otherwise cheaper) RE is tied up in the Garment District so our intrepid startup is forced to move to a less desirable location far from Midtown.
In a few years the Garment factory still closes because it just cant compete with Asian labor costs, and our Web start-up is just scrapping the bottom surviving but having lost all the startup excitement and drive, has lost the timing and edge to really scale up.
An alternative? The city removes the restrictive zoning in garment district, overall Class-B and lower rents fall (or dont otherwise climb as much) and our interpid startup finds the perfect location. Leverages its midtown location and startup potential and becomes a huge player in mobile ads for smartphones - hires hundreds....Sadly yes the Garment factory closed a couple of years earlier then if everything had stayed stagnant but it was closing either way.
Which alternative is better for "everyone"? #2 of course.
Now I aknowledge economics isnt that simple or cut and dry but ultimatly this is more or less the choices socities face. Government/Society can try to help ease the transition (protective zoning for example) but sometimes the "world" reality is tust more powerful and forces changes that seem unfair.
You are right, we are all in this "together" and we all have obligations to each other - and that is what taxes, government and charity is for BUT sometimes it is better to letter the natural "unfairness" of life take hold, rather that institute a tyranny in the name of "fairness" that ultimately benefits LESS.
Point of all this is - LL and commercial tenants are ultimately in the same business - making $ - neither are inherently more noble, more deserving or more morally entitled to their return on investment.
Posted by: fsrg at November 23, 2009 4:37 PM
fsrg- and I agree with you on that. But I'm trying to be fair :-)
Posted by: bxgrl at November 23, 2009 4:43 PM
MM- I love how he keeps coming back to see if anyone cares he left. Like that Opera where the soprano sings "I die! I die! I die! and keeps singing for 20 minutes.
Posted by: bxgrl at November 23, 2009 4:45 PM
bxgrl - since as a "party" to the Government (this is a representative democracy) - I'd have lots to say about it...
However the Government is decidedly NOT a party to a contract (lease) between two businesses (both seeking to maximize their profit) and so it should have no (or very limited role).
And again - if "protecting" a dying industry (NYC Garment manufacturers - your example) would benefit society as a whole - if we could do it with the burden of that protection being reasonably distributed amongst societies beneficiaries (i.e. not just evil landlords) - then I'd likely to be in favor of that - but unfortunately I have seen no such plan that would do anything other than delay the inevitable at a cost very unfairly distributed - and the same applies for Commercial Rent Control and protecting "small businesses"
Posted by: fsrg at November 23, 2009 4:51 PM
fsrg- in case you didn't notice, I also have a lot to say :)
And thank you for stating your case in a reasoned and comprehensible way. I do not think landlords are evil- Nor are all tenants good. I don't think tenants are entitled to the cheapest rent but on the other hand, and still accepting your reasoning, I think the overall good is not well served by strictly following only what the market will bear. I don't believe in "redistributing" wealth- but I wish for more responsibility on everyone's part.
Posted by: bxgrl at November 23, 2009 5:14 PM
Expert Textpert,
In the southwestern part of Bed-Stuy, there are 2 strips: Nostrand, north of Fulton, and Tompkins. There's a little strip between Jefferson and Hancock on Tompkins, on the eastern side of the street, with an upscale furniture store, a furniture re-finisher, a wonderful little dress shop, and a pet groomer, plus the now closed Brooke Valley restaurant. However the owner of the dress shop told me that it's owned by Bridge St. Church and they are very difficult to work with.
Bedford (the blocks north of Fulton) looks like it has a lot of empty storefronts that could be developed, but nothing much going on there right now.
This area has beautiful brownstones and great transportation and it's gentrifying like crazy, with lots of people moving east from Ft. Greene and Clinton Hill.
Posted by: rf at November 23, 2009 5:43 PM
Fsrg- I am talking about an added "vacancy" tax, a surcharge or penalty for not utilizing the property. I am with you in opposition to commercial rent control, but I think there are other ways to address the issue. The simplest is to make it not worth a LL's while to keep a place vacant by charging them for the privilege.
Benson- I accept your point, but can you really link the 99 cents stores to the decline in the neighborhood? It seems a bit of a stretch. And if these stores had such a deliterious effect on the neighborhood, isn't it logical to assume that empty, unkept store fronts would have been at least as problematic?
Posted by: orestes at November 23, 2009 7:05 PM
Daveinbedsty=biidiot
Posted by: hannible at November 23, 2009 7:06 PM
Orestes;
Of course the decline in the neighborhood was not solely due to the 99 cents store. I also agree that vacant storefronts are deliterious to a neighborhood, BUT, there is one big difference.
Those 99 cent stores were locked in for a 10 year lease, and hence remained an obstacle to the neighborhood's improvement for that amount of time. On the other hand, vacant storefronts can be a short-term problem and then, a catalyst for the neighborhood's improvement. How so? After one year of no rent coming in, the LL may wise up and lower his rents, allowing a variety of quality places (like dry cleaners, cafes, etc) to come in at rates with which they can make a good living.
Sorry, but I think your tax idea is harmful.
Posted by: benson at November 23, 2009 7:37 PM
No one is going to shop in stores that have higher rents because those costs show up in the final cost of sale. Look at where most people go do their fish buying, food shoping and fruit and vegatable shopping. It is definately not in Brooklyn Hieghts or Carroll Gardens. Every penny counts.
Posted by: hannible at November 23, 2009 9:39 PM
You know Benson, for somebody who was routinely refers to the Fedders haters on this blog as elitist, your comments about 99 cent stores sound awfully - dare I say - elitist.
Posted by: DitmasSnark at November 23, 2009 9:49 PM
dammit, missed a good one
Posted by: blowfish at November 23, 2009 10:53 PM
BTW NY City hasn't been helpful in this either. They have been increasing the real estate taxes on these small buildings exponentially. The taxing authorities have taken the position that even when you don't get the highest rent they will tax the building based on the highest rent and comparative value based on sales from other buildings in the area.
Since NY City gets a fair portion of its income from real estate taxes, they want high rents to support high RE taxes.
Posted by: smeyer418 at November 23, 2009 11:01 PM
Snark;
Hmmmm - you've got a point there.
However, may I make a statement before you give me my sentence?
I have nothing against 99 cent stores per se. My point above was that the landlords in this area, in their panic to rent out these storefronts, did not exercise "portfolio management", with the result being an over-concentration of these stores - to the neighborhood's detriment.
OK, your honorable snark, I am ready to receive my sentence.
Posted by: benson at November 23, 2009 11:48 PM
> OK, your honorable snark, I am ready to receive my sentence.
There will be no sentencing, but I do recommend intensive psychotherapy to relieve your persecution complex.
Posted by: DitmasSnark at November 24, 2009 10:46 AM
In that case, I hereby sentence you to a comedy workshop at the Learning Annex. ;-)
Posted by: DitmasSnark at November 24, 2009 2:19 PM
You know how in Manhattan store owners allow their unsold property to be used as art spaces until they can sell? Why can't the same be done in Brooklyn? I mean this former Royal Video location is in a perfect spot for a small pop-up gallery or something along those lines.
That said, I really was sad when this Royal Video closed. Back in the day my pals and I would drive all over Brooklyn to find video stores that would rent us adult films without ID; you kids with your Interwebs and downloads, feh! So this place is one of the places we'd stop by... And yes, they refused to rent to us. But still, at least we tried :(
Posted by: Jack at November 25, 2009 12:32 AM
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