Opinion: Combating ‘high rent blight’

State Senator Brad Hoylman

By Brad Hoylman

“Commerce is killing culture.” That’s what an East Village small business owner told me as my office prepared a report documenting how independent businesses are being forced out of our neighborhood by rising rents and replaced by national chains or left vacant for years.

I continually hear concerns about this phenomenon — known as “high-rent blight” — from neighbors concerned about availability of local goods and services, empty storefronts’ negative impacts on neighborhoods, and the loss of treasured bookstores and restaurants.

My report, “Bleaker on Bleecker: A Snapshot of High-Rent Blight in Greenwich Village and Chelsea,” examines this vexing problem. Using data collected through surveys across major commercial hubs, the report found a storefront vacancy rate as high as 6.67 percent along Second Avenue from 3rd to 14th Streets, and an even more alarming 10.83 percent storefront turnover rate over the last 12 months. On First Avenue from 10th to 23rd Streets, the vacancy rate was 5.76 percent, while the turnover rate was 11.51 percent.

The vacancy and turnover rates on First and Second Avenues are apparent to anybody who has walked down the street in recent months. “For Rent” signs hang in windows all along the street while chains and pharmacies occupy vast swaths of real estate once home to legacy businesses.

A trend has emerged: landlords, in the pursuit of higher and more reliable rents, don’t renew the lease of longtime businesses. They then keep the space vacant, holding out for the payout of a long-term lease from luxury retail or corporate chain, which can take months, or even years. The result is a glut of empty storefronts or chain stores and high-end national retailers, to the detriment of local small businesses.

A version of this is playing out with Stuyvesant Town’s Associated Supermarket, whose future is in doubt due to fears of a rent hike when its lease expires at the end of the year. We recently learned the grocery store’s lease will be extended an extra 18 months, but it’s unclear what will happen after that.

Some real estate analysts insist higher rents are the natural outgrowth of a strong retail market or that the spate of closings along First and Second Avenues and elsewhere is due to new pressures from Amazon and online retailers. Both could be true. That doesn’t mean a community shouldn’t try to do something to save the “mom and pops.”  Self-concern should be a motivating factor. Studies show chain stores are far less likely than their local counterparts to keep profits in the community. One study found that only about 13.6 percent of revenue from national chains is reinvested back into the local economy, compared to 47.7 percent from locally owned businesses.

I’ve suggested a number of strategies to address this situation:

  • Creating a Legacy Business Registry that would track and maintain a list of small businesses that have been in operation for at least 30 years. This would enable the state to recognize important businesses and possibly provide them and their landlords with historic preservation tax credits and other incentives.
  • Passing legislation that would allow the city to implement formula retail zoning restrictions. Under such a plan, local communities would get a say on the number of formula retail stores (chain stores, big drug stores, banks, etc.) opening in their neighborhood. This builds on the creation of a special zoning district for a portion of the Upper West Side sponsored by Borough President Gale Brewer when she served in the City Council.
  • Phasing out deductions for depreciation of property and operating expenses for building owners who leave retail spaces vacant for more than a year.
  • Eliminating the Commercial Rent Tax for small businesses. This is an onerous, outdated burden on commercial tenants below 96th St. The City Council is set to reduce this tax. The state should act, as well. Our council member, Dan Garodnick, has been leading this issue, which I hope will come up for a vote soon.
  • Requiring the city to collect and publish data on commercial vacancy rates. Currently, this information is not available to the public.

Whether it’s the Associated Supermarket at Stuyvesant Town or our favorite local bookstores, we need to do more to protect the gems that make our neighborhoods affordable and special. As a start, I plan to introduce legislation based on the ideas in this report – and I look forward to hearing your views on this important issue at hoylman@nysenate.gov.

Hoylman is a New York State Senator, representing the 27th Senate District (Greenwich Village, East Village, Lower East Side, Stuyvesant Town, Chelsea, Hell’s Kitchen, Upper West Side).

 

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6 thoughts on “Opinion: Combating ‘high rent blight’

  1. The solution is right in front of these politicians…. SBJSA!

    I can’t take any article seriously when they don’t mention SBJSA, but they do mention Garodnick’s commercial tax reform. I wish I could say these politicians were clueless, but they’re not, they’re just corrupt.

  2. Mr. Hoylman, Can you please clarify if you support SBJSA and if not, why not? This clarification would be most helpful to your constituents.

  3. SHAME, SHAME A decades old commercial real estate bubble that has been allowed to grow out of control and make wealthier people from all over the world even more wealthy at the expense of every NYer . A crisis that has grown worse each year with countless long established businesses closing and empty storefronts on every main street in city. Yet, our lawmakers remain silent and refuse to regulate the powerful REBNY who are rigging the system to stop any law giving rights to renewal commercial leases to the owners who will not survive without this right. All of Hoylman’s proposal will not save a single business or job.
    Who does he believe he is fooling when every NYer knows the rents are out of control and greed rules. Why doesn’t he want the commercial owners to have any rights? Why does he want only the landlords to have all the rights to the renewal process ?

    • Exactly right!! These politicians think we are fools, but their corrupt ways that affect their constituents are coming to light more and more every day. With the internet, nothing is hidden anymore and we all know where politicians stand on all issues. Shadiness and corruption by politicians is ultimately what got Trump elected.

      Everyone should make it a point to ask the city council nominees where they stand regarding SBJSA. All we know is Mr Shapiro is for it.

  4. The Tenants Association needs to do more to ensure affordability for all those in the neighborhood, including commercial tenants.

    Please contact your Tenants Association and urge them to stop sitting idly by, while these small businesses face ever-escalating rents.

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