ST Associated owner worried about renewal

The Associated’s owners recently closed a Third Avenue Met Foods supermarket. (Photo by Sabina Mollot)

The Associated’s owners recently closed a Third Avenue Met Foods supermarket. (Photo by Sabina Mollot)

By Sabina Mollot

The owners of Stuyvesant Town’s Associated Supermarket are worried that theirs could be the next local supermarket to disappear.

While the end of the store’s 15-year lease is still two years away, one of the owners said they have been trying to confirm that there would be an opportunity to renew at that time for over a year.

According to Joseph Falzon, the principal owner of the Associated, he’d been asking because he wants to renovate the store.

But, he explained to Town & Village, he wanted to make sure the store had a future before making the investment, which he feels is necessary given competition from places like Trader Joe’s and Whole Foods in Union Square.

“I called up last June and said, ‘It’s time to talk about a lease. We’d like to revamp the store,’ and at that time they just ignored me,” said Falzon. He continued to call but was told to ask again closer to when the lease would be up. But Falzon didn’t want to wait, explaining, “The store needs a face lift right now.” In a recent conversation, when he asked, “’When the time comes for a lease renewal will you talk to us?”, the answer from a company rep was that he “wasn’t at liberty to say right now,” Falzon said. “Our feeling is that the landlord doesn’t want us to renew when it’s up. We’re good tenants. We pay our rent. I don’t know if it looks hopeful.”

Additionally, recently, a representative from a competing supermarket who Falzon declined to name, has also approached CWCapital about taking over Associated’s space.

“He offered double what we pay and they said no,” said Falzon. “I don’t know if they have plans for it. They’re not telling us, anyway.”

Falzon said he would be happy to stay if given an increase “that’s livable. That would be no problem.”

But double is out of the question — as is triple, which is a rumor that was passed on by a Town & Village reader who said she learned the place would be priced out due to a triple rent hike.

An employee confirmed this when Town & Village called the store, but Falzon dismissed this as just a rumor, saying he thinks it’s probably what people are expecting the rent hike to be if the lease renewal is offered.

Currently, the store, which has been in business for around 25 years, pays $60,000 a month.

If the rent were to be tripled, store manager Norman Quintanilla predicted, “This place will be empty for a while.”

This news comes on the heels of the recent closure of Gramercy’s Met supermarket on Third Avenue and 17th Street, which had the same owners as the Associated. That space, too, has remained empty. “The rent went up and nobody’s renting over there,” said Quintanilla. “It’s the same situation.”

The owners of that franchise and the Associated are four partners, whose president is Falzon. Along with the now-closed Met and Stuy Town’s Associated, the partners own two additional Associated stores, one at 14th Street and Eighth Avenue and another at 8th Street and Avenue C.

The Met store had faced some competition from the Union Square Trader Joe’s market but Quintanilla said the Associated has not had the same problem.

He added there’s still hope the lease will be renewed. “We have two years and a couple of months. There’s a lot that can happen.”

A spokesperson for CWCapital told T&V the owner would not comment on lease negotiations.

But back in April, ST/PCV General Manager David Sorise of CompassRock said in an interview with Town & Village that much of the interest in the complex’s retail spaces was coming from food-based businesses. Fortunately, food-based businesses are also what residents tend to ask for.

“It’s not just about which person’s going to pay the most rent,” Sorise said at the time. The newest retail tenant to be announced at that time was Chipotle, which is moving into the former Broker Welcome Center space on First Avenue.

Falzon said that while the former Met supermarket was losing money, it hung in there years after Trader Joe’s opened.

“But the rent keeps going up and up and up, your electric goes up each year. Your labor goes up. If you don’t increase your volume, you’re not going to survive,” he said.

The Associated, he added, isn’t making as much as it once did, which Falzon said is due to the area’s changing demographics, among other things. This is why he wanted to upgrade the store’s look.

When rent goes up, Falzon explained, supermarket owners can’t necessarily raise food prices much higher to compensate. “We have to stay competitive.” Plus, Falzon added, some supermarkets don’t use union labor while his does. He also mentioned the loss of numerous customers on the south side of 14th Street when several buildings were destroyed in a fire in 2010, and in Stuy Town, the influx of students has had an effect on sales.

“Students don’t shop like families,” he said.

If made to close the 14th Street location east of First Avenue, Falzon said he isn’t sure if the store would move nearby since he doesn’t know of any other available space.

“I don’t know how much there will be across the street (between Avenue A and B) in the new buildings they’re building,” he said, of the residential development that will replace the buildings that burned down in 2010. “Other than that there’s really nothing around here.”

Of course, the struggle faced by supermarkets isn’t exactly unique to Stuy Town.

Money-losing supermarket giant A&P has been trying to sell off all of its stores, while an article in Crain’s in August reported that Fairway supermarkets in New York were losing ground to Whole Foods stores that were opening nearby.

Along with the Associated, other supermarkets in the Stuy Town/Peter Cooper Village area include Gristedes on First Avenue and 21st Street and Gristedes on the Plaza level of Waterside Plaza, Morton Williams on East 23rd Street in East Midtown Plaza and C-Town on Avenue C and East 12th Street.

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3 thoughts on “ST Associated owner worried about renewal

  1. I hope Associated doesn’t close. I really like that store, although I wish it were a bit bigger because it gets very crowded at times. The prices are reasonable and the managers and checkout staff are always, in my experience, pleasant and helpful.

  2. It absolutely needs a remodeling, but I agree that ST management needs to interact with these retail tenants well before lease expirations are imminent. We’re not 5+ years away from the end of their lease… they know what the market is like now, and they can start negotiating for what they believe is a reasonable asking rent. Waiting until the last minute to ask for double (or more) rent is hostile and disruptive and greedy.

    • Sadly, hostile, disruptive and greedy is what CR does best. There’s no professionalism about anything they do and they never, ever have the best interests of the tenants (residential and commercial) in mind. It’s all about grabbing the shekels.

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