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 email@example.com.
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).