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…
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.
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.
“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.
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!
“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.
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.
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.
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.
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.
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.