Compared w/ DC, San Francisco and other cities with large urban residential areas, NY may have a surplus of retail space along some of its avenues, especially in the relatively quiet Upper West Side and Upper East Side (including Yorkville). We New Yorkers are used to having everything we need just a good 3 wood shot from our front doors, but now Amazon packages come in those doors daily. Coops, condos and rental buildings should consider converting retail space to more llving space (maisonettes?) and professional suites. Some retail will never come back, for example, antique stores on Madison selling 'brown goods' as only folks my age seem to like old English and French furniture. Food Markets? Bigger or bust, but even Dean and Deluca is reported to be in financial trouble. Fresh Direct anyone? But who cooks.
5
To be frank, some of these photos depict empty storefronts, but fail to capture what is often heavy foot traffic right outside of those storefronts. The neighborhoods aren't dying simply because the storefronts are disappearing, even though a certain kind of charm is undoubtedly lost every time a long time neighborhood fixture closes its doors.
One of the factors reader seem to be alluding to here is the role of foreign investors in driving up prices. In many alleged cases, the investors in question are parking their money in US real estate assets because it is safer to do so than to keep the money tied up in banks or assets in Venezuela, Russia, Brazil or China, places from where investors may hail. In the residential market, these kinds of overseas "investors" often purchase residential property which they fail to either occupy themselves, or sublet to others. I fail to see why a similar trend would not also hold in commercial real estate.
5
Limit the tax deductions for vacant buildings. No write-offs for letting space languish.
10
Wow these photos make the city look a lot uglier than when I moved there in '78 (left in '92) - though with the air pollution back then maybe it was hard to really tell. The Mom and Pop stores, small restaurants, and the experimental eccentric stores gave such a rich texture to almost every block.
8
Might have been mentioned too that this is hardly a unique NYC problem. Most malls have tons of empty storefronts, several malls have closed down completely. Small towns are also losing small businesses. This is an American trend, not a NYC trend.
6
While I have never lived in NYC, I have been a regular visitor there for over 35 years. I mostly visit Manhattan and had come to rely on the many bodegas, little eateries, pizza parlors, art supply shops, small specialty stores and boutiques, newsstands, shoe rapair shops, and the like. They were around every corner all over the city no matter which hotel I was staying at. They are mostly gone now; the neighborhoods less cohesive and lively in their absence. I miss them and I feel sad for the NYCers who utilized them every day.
9
“Most landlords are not waiting for top dollar — they’re waiting for good tenants and they’re often willing to take less than market rent,”
How disappointing that we're treated here to another 'artistic' presentation regarding this now hoary 'vacant-storefront situation'. These reports really are nothing more than armchair disaster-tourism.
What happened to real investigative reporting? Why no exhaustive exposé? Why isn't the Times badgering elected officials - ones that matter - as well as the REBNY (our City's quintessentially powerful real estate lobbyists).
As an obvious start, how about defining exactly what each of these above-quoted terms means:
"Most landlords..." (how many? what percentage?)
"top dollar..." (which is what, precisely?)
"good tenants..." (define 'good')
"often willing..." (how often?)
"less than market rent..." (how much less?)
Anyway, the pictures are evocative.
And of course there IS other important NYTimes front page fare to digest, like August 28th's "What Ducks Hear Underwater", for example.
13
DiBlasio and Ocasio-Cortez can convert these empty retail spaces into redistribution centers where the 99% will collect their free stuff from the socialist government after Bernie Sanders is elected President.
4
How bout that, Joe McCarthy has been reincarnated.
9
“Then there is the blight that shuttered stores bring, including vagrants, graffiti and trash.”
Are you calling homeless people “vagrants”, part of a “blight” on vacant expensive retail areas?
Thought so.
4
The caption on the photo for Prospect Heights should read Flatbush Avenue and Prospect Place, (not Park Place)
2
Where I live there's a CVS, Subway or Dunkin' Donuts and Cumberland Farms on every corner. These types of businesses are rubber stamped throughout the neighborhoods whereas they all just blend into one monochromatic blah.
America has become ugly. Along with all of the debris littered about the roadsides that these businesses create. It's depressing.
12
2008 was the turning point that set all of this up. When the foreclosure crisis and crash happened, REITs, banks, and foreign investors swooped in and bought everything. In some cases they scammed older people out of buildings with reverse mortgages. What we ended up with is an entire city owned by rich companies and jerks. Yes online retail has hurt the mom and pop stores. But the commercial rents these folks are asking for are absurd. I'm a little flabbergasted by the quotes from the realtors in your article that suggest that the building owners have the community interest in mind and just want good tenants. That is false! Those of us who live in these areas know because we talk to the small businesses about why they are closing and it is never because of online retail and always due to escalating rents. A 15 year leas is up, and boom your rent triples, or more. Banks should not own buildings, people should. People who care.
24
Thanks to an inert City Council and a no-show, do-nothing Mayor, there is no hope for a commercial rent control law. On the Upper West Side of Manhattan, part of the problem is that rental buildings along the avenues are being being purchased as investments by hedge funds. They care about noting but maximum profits at the expense of storefront business owner and neighborhood needs.
9
NYC landlords are beyond greedy.
Manhattan is a now a mall, with more and more commercial space being aimed at the luxury or tourist market. The residential area near the Museum of Natural History is one example.
The Shake Shack caters mostly to tourists, a dry cleaner was forced out and replace by a tourist-bicycle rental shop.
In March 2018, landlord Equity Residential pushed out longtime neighborhood restaurant Scaletta seeking to use the space for an upscale restaurant.
Despite the fact that the West Side is full of vacant spaces and that Scaletta would have agreed to a rent increase, Equity Residential pushed out this popular and stable business.
Once a longtime business is pushed out, it is gone forever. Inevitably new businesses are short-lived, churning in and out.
This is how to destroy a neighborhood.
18
What I see in the photographs is tagging by thugs who can't produce art. Now, these are examples of what our nation, New Zealand, has done to do away with tagging and replace with street Art. I don't like the word graffiti and prefer street art. Tagging is not street art. Anyway, taggers will stop tagging if street art flourishes and can be turned into Street Art walking tours, as has happened in our city, Christchurch NZ. Do a web search of these words:
Graffiti has played major role in Christchurch's recovery - researcher
OR
Christchurch's street art walking tour goes behind the scenes
https://media.newzealand.com/en/story-ideas/christchurchs-street-art-wal...
OR (this was in the NZ Herald newspaper 3/8/15)
Tag team: Scrubbing out city's graffiti
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11490889
2
This New Yorker disagrees. Commisioned street art is cute and all, but graffiti represents everything a city should be--culture, tension, diversity, resourcefulness, boldness, ego and struggle. The most dynamic cities have it--NYC, New Orleans, Lisbon, Berlin for starters. Keep your murals and we'll keep our graffiti.
4
I think you'll find what's happening in NZ in the NZ Herald article, 'Tag team: Scrubbing out city's graffiti' , coming your way soon! You need to read the article in the link I supplied and see that very few people would agree with you. No one wants to see forced vandalism and scribble as it makes a city unwelcoming.
2
Make shopping cool and fun, instead of the big drag it is, and people will respond. Make it an experience. Quit complaining and get smart.
Could we please have information on what camera was used for these shots? Really beautiful work. Thank you.
2
the middle class who would shop here are gone.
Plus most of these in coming people ,are not living here year round.
It an investment for the rich
Where are you on this Bill ??
8
Brick and mortar retailer, here.
You buy all of your stuff from .com companies, and this is what you end up with. No stores. Congratulations, New York (and really, US).
8
Heartbreaking! But, what about southern Brooklyn?!
4
Looks pretty gruesome area and not one I'd feel safe taking a leisurely stroll around. Looks very uninviting with all that graffiti around. Local government needs to make laws to prosecute people who damage buildings with spray cans and they need social services schemes to stop graffiti. And has local or central government produced statistics on how many foreign absentee owners own the buildings and just holding onto them for property speculation or tax deduction purposes so as to run at a loss and offset the loss off other income.
It will be government policies and rents that stop people from occupying the businesses. In this modern day and age most people shop online and if you want locals to shop locally then they have to live locally. You also need parking nearby to go shopping and probably why people prefer shopping malls and suburbs for shopping as they have huge car parks and you don't have to walk far.
I was watching the tv programme 'American Pickers' the other night and they were looking for a place on Rhode Island to go to and there was a constant flow of tour buses going down one street where the rich live and taking photos of the beautiful historic houses. So bus tours of beautiful houses on some swanky streets are booming but no one wants to shop where go sight seeing where they don't feel safe. Lots of food for thought!
5
Don't blame the kids with the spray paint for this... don't blame the infrastructure.. it worked for the past 100 years.. what has changed? The rent, ( greedy speculators) the wealth is all stuck with the top 2%. No one can afford they rent, the people who own the property don't really need the money OR THEY WOULD LOWER THE RENT ... now do you see what is happening?
7
tax deductible and probably negative gearing to get a refund from other income. Our government in NZ did away with negative gearing so as to stop the housing bubble and they've tightened up on laws so foreign absentee speculators can't buy existing properties and have to add to the housing stock by building new properties. Australia has had this law for years. Vacant properties or ghost buildings need to have an additional local government tax put on them if owners are land banking for property speculation purposes.
4
No mention of the Small Business Jobs Survival Act, languishing in the City Council since 2017?
http://takebacknyc.nyc/sbjsa/
I'm so tired of hearing the excuse that "online retail is the problem." Nonsense. Here's a thought experiment: Imagine if commercial rents were slashed by, say, 90%. Every storefront in NYC would have a mom-and-pop retailer in it. Every. Single. One. If they were slashed by 50% we would still see a rush of new and specialty shops. The "problem" of empty storefronts is a manufactured one, created by an absurd lack of regulation, as if retail were somehow exempt from urban planning and policy.
Small business is a huge engine of New York City's economy, particularly for immigrants; there is no shortage of people who want to own shops or people who like to buy locally. (Unlike the rest of America, where one has to get in a car and schlepp out to the mall, New Yorkers can pick stuff up on the way home.)
It's now crystal-clear that the warehousing of storefronts by landlords will not stop until the City Council makes it punitively expensive to warehouse a space. In my own stretch of UWS Broadway there are storefronts that have been empty since 2001. However much the landlords may dream of "top dollar" leases, a storefront in a prime location that has been empty for more than 15 years is surely a losing proposition, both for the landlord and for the city's tax coffers.
(Note to Gale Brewer: time to stop doing surveys; time to enact legislation.)
13
Gale Brewer wants to be our Mayor. What's her real record? Not much.
2
It's a tragic sight indeed to see these storefronts like gravesites everywhere in NYC. Lots of people are bemoaning it, but they don't realize, they're part of the problem. When people do most of their shopping online, stores vanish.
I barely ever shop online, and I try to go to stores in my neighborhood that aren't major chains, so as to support small business owners. But since I'm one of the few that lives that way, I know my efforts will be in vain. Someday all the character of NYC's storefronts will be gone. Someday I'll be pushed out too, by NYC's increasing expense. Too bad, because this used to be a really cool city.
8
It's not just you. I do very minimal online shopping, and only for odd items that are not stocked locally. I make a serious effort to buy from local merchants and small, non-chain businesses.
I guess I am one of the few, however, who do not see the "charm" of Amazon -- or the need to spend $120 a year to get "free" shipping -- or WANT my groceries sent by mail in a half ton of packaging. I do not see particularly good prices or deals on Amazon AT ALL. If you do not know precisely what you want....Amazon is too cumbersome to "browse", which to me is THE FUN PART of shopping.
Honestly though....this is not about Amazon. If it was, you'd see clothing & electronics & supermarkets going out of business, but LOTS of personal services, which CANNOT be done online -- hairdressers, nail salons, restaurants, bakeries -- but you don't. You see EMPTY STORES. That tells me it is speculative, sky-high rents causing the losses....and realtors who are taking advantage of corrupt tax laws to write off the empty storefronts.
You want some good advice? don't wait. MOVE NOW.
2
When I worked in NYC during 1986-1990, there were no national chain stores only local ones (Duane Reade is one) with Barnes and Noble being the exception. They were born in NYC and remained there. That was an aspect of NYC that not only made it charming, but unique! You entered a different world when in NYC at the time because everything was different than what you would find elsewhere. Ah....the good old days.
Even the subway and trains ran on time (most of the time),
15
It's the internet. This phenomenon is happening everywhere. A 25% drop in sales for a retail location is enough to put it out of business. Alcohol, banks, prescription drugs, etc can support retail rents. Landlords have much more information about "market rents" and less likely to take a chance on smaller retail. Creative people are selling things online and making much more money with no rent to pay. Eventually there will be enough empty space that things will have to change but they aren't going back to old days. Eventually landlords may be able to convert empty store fronts into apts. are something else. Maybe Amazon will start a local store division where people can crowd source their wares and get economy of scales with Amazon's distribution network. Either way things are going to change.
1
Yes, it feels a lot lot like the '80s. Not just because of the vacant storefronts. The other day, while walking my dog, I noticed two junkies having sex in a public park in Manhattan. Next to a busy highway. On a Wednesday. at 7:00 AM in the morning. But what else is there to do after you shoot up? Maybe its not crack but yes a lot like the 80s. I am just about done.
7
Of course it is landlord greed. They get tax breaks for vacant units. Instead, they should get fined.
14
I have watched the decline of retail in New York for more than a decade, and think I understand the 9 sides to the story, but what no one has every been able to explain to me is how zero rent is better than some rent.
13
Three main reasons:
1. Retail leases are often 5-10 years long. If you think signing a tenant today would lock in significantly lower rent for 5-10 years than would signing a tenant in a year or two, then it makes sense to hold the space vacant.
2. The retail tenant impacts the rest of the building. For example, if your office tenants are primarily lawyers and financiers, then putting a low quality restaurant on your ground floor might hurt your current tenants and negatively affect your ability to attract other office tenants. It could hurt the image of the building. Waiting for a higher quality restaurant or a non-food tenant would make perfect sense.
3. Landlords can claim tax losses from vacant space. This isn't a reason to keep space empty if a good tenant shows up, but it certainly lessens the financial blow while space is empty and helps landlords be more picky.
7
Business loss is a tax write-off.
2
Human Capital Theory refers to the aggregate stock of competencies, knowledge, social, and personal attributes embodied in the ability to create intrinsic and measurable economic value.
Could it be that the problems of NYC derive from a shortage of human capital?
2
That is an interesting thought. Could it be that the value created by paper-pushers is ephemeral rather than intrinsic? The loss of the varied store-front businesses speaks to a greater loss in diversity of economic activities in the city. NYC is turning into a bastion of financiers to the detriment of its community.
2
"Could it be that the value created by paper-pushers is ephemeral rather than intrinsic?...NYC is turning into a bastion of financiers to the detriment of its community."
That sentiment is decades late and otherwise insufficient to explain whats happeing. So I disagree with it wholeheartedly. But I do agree with other commenters who suggest that the City IS evolving - and quickly - into just one more bland urban environment, overflowing with undistinguished, utterly-average, detritus-commerce businesses like Papa Johns, Dunkin Donuts, McDonalds, Starbucks, CVS, 7-11, Target, Home Depot, Lowes, Metro PCS, Applebees, Chipotle, etc., ad nauseam.
In other words, scared and uncreative types proffering 'scary' and uncreative products to an increasingly timidly average crowd who don't know any better and who will actually celebrate the opening of a Starbucks, Dunkin Donuts or 7-11 in their neighborhood.
4
There's a lot going on here. Cash flowing from tax cuts, tax breaks, and foreign sources distorts the real estate market. For young people, wages don't support the high rents (my kids left the city) and it's questionable how much discretionary income many urban dwellers have. Those looking to purchase an item, find many of the dated small shops have limited selection, questionable quality or return policies, and often, merchandise is counterfeit or "knockoffs". Those that survive specialize offering convenience, uniqueness, or value.
I, now, visit NYC by choice. I see construction and buildings reminiscent of skyscrapers that were monuments to the persona and egos of capitalists of the time. I wonder who'll fill these ugly, square pillars in the sky? Who'll fill the glass structures of the west side projects? Who will (can) live there and what will the community look like? I remember walking the streets and riding the busses and subways of Manhattan since the 60's. Watching HBO's "The Deuce" invokes ominous memories, particularly seeing the pictures in this article. In that, I know, I am not the only one. Listening to brokers about the real estate dilemma is like asking politicians of government problems. One only marvels at the elusive and circuitous responses. I fear New York City, within its confines, suffers being a Tale of Two Cities were it is the best of times and the worst of times.
8
This is just another example of corporate wellfare of our flawed capitalist system. The greedy landlords leave the spaces empty as they can write that off their taxes. They rather ruin businesses and drive out tenants in the process. Stores have to make goods too expensive for the people with our stagnant wages to afford them and on and on.
We urgently need the vacancy tax our mayor is proposing to put the landlords in check and save our city. But I’m sure the real estate lobby has deep pockets to buy lawyers and politicians (and the NYT) to prevent that.
13
Local entrepreneurs have started to give up on NYC. The coming $15/hour minimum wage will slowly choke off outer borough restaurants and cafes. The kind of hard working person who wants to start any kind of a retail business sees the handwriting on the wall. Paying some unskilled person $31,200/year to pour coffee isn't a working business model. NYC also has laws that control employees work schedule. It all adds up. The message to small business owners is 'GET OUT'. NYC commercial landlords property taxes go up every year. That expense has to be passed onto tenants either directly or through increased rents.
3
Well but poor low wage people cant buy expensive goods that need to be expensive so the buainess can pay the rent.. It’s the high rents that are the culprit not the higher minimum wage!
8
Why don't they convert some of these retail spaces to ground floor apartments?
4
Retail spaces are significantly more profitable than apartments (particularly ground floor apartments, which are the cheapest breed of apartment). It's better business to wait out a retail vacancy, even for years, than it is to spend money changing a space and renting it out for significantly less money.
That said, it still might be a welcome option to some landlords, but often times they aren't allowed to do this. In many of these places, particularly along avenues, the zoning code requires retail continuity along the street wall. Other options would be creating ground-floor office space or simply expanding lobbies to make the office/residential spaces above more attractive, but the same rule could apply.
5
(Sigh) how I wish. We're suffering the same way in San Diego, where we have a severe shortage of affordable housing, just like LA and NY. Unfortunately, laws that were written decades ago often mandate ground-floor retail. In all major cities, there needs to be a revamping of building regulations to allow ground-floor retail to be converted into living space.
2
...photos make it look like NYC c1982.
10
I heard a blog last week on Mighty Mug and here is the topic of the story again but in the Financial Times.
09/06/2018, Financial Times
UK retailers squeezed by postal subsidies for Chinese sellers
https://www.ft.com/content/3af8bfb8-ad3a-11e8-94bd-cba20d67390c
and here is the first article but this time it takes place in America;
06/14/2018, International Housewares Association Blog
Mighty Mug
Why is the USPS Charging You 5x What They Charge Chinese Shippers?
https://blog.housewares.org/2018/06/14/usps-charging-5x-charge-chinese-s...
Why buy something on the internet for 5 dollars and it arrives in a week or shop at the corner store and pay 15 to 20 dollars its a no-brainer.
3
The Times is just a wee bit late to the parade on this. It is not just the landlord asking exorbitant rent; it is also the bank who finances the condo etc. requiring a chain retailer in the commercial space as part of the deal. That's why across the street from me, the new condo's anchor tenant will be Starbucks and we need another coffee shop, not. But odds are the Starbucks will put the local shops out of business.
5
I have been a frequent visitor to NYC for over 40 years. It is easy to see the changes in the retail and restaurant world. All of the things I would do on a typical visit - the book and record stores, the neat shops that you just had to wander into, all with prices less than we had at home for items we would never find elsewhere - are gone. The little diners and inexpensive unique restaurants are now hard to find. Used to be we would just pick out a neighborhood and spend the day wandering. But it's all mostly gone now. The uniqueness of NYC for this visitor has disappeared, the things we did just aren't there anymore. I stay in NYC for more than a day or two now and it just becomes boring, and the friction and cost of doing the day to day activities has overcome the the remaining things that made NYC my former favorite places to visit. The reasons are many, of course, and they all contributed to this evolution.
40
I only visit the city now. I've wondered if the "friction" you suggested was from my getting old. But, alas, it is from the very conditions you have described.
7
My husband and I lived in Gramercy Park where we sold our studio for $100,000 and moved to the suburbs. We had always intended to move back but no more. Two days ago, when stopping at Zabar's after work, there were two homeless men, one of whom was openly urinating in the street. Once a town of interesting stores, it is just like our town, Whole Foods, Trader Joes, Bed Bath, and Beyond, to name a few. Why return for streets that smell like urine, a small, hot one bedroom which costs close to one million dollars. It's simply not worth it anymore. Though I have many friends who live there, I am close enough that I can visit, and I work in Manhattan, splitting my time between the classroom and home. That is enough. Additionally, once Russians and other foreign investors who purchased absurdly priced co-ops to launder ill gotten goods are arrested and leave, there will be plenty more vacancies.
25
You comment sums up the situation much better than the article in explaining the changes that occured in NYC. I often wonder about the level of experience and knowledge of the NYT reporters who write about the region.
3
How ironic that the people coming to the City waving wads of cash, eager for that mythic New York experience, have driven out everyone who was capable of providing it. This is why all these glass towers are choking with "amenities", since there is no reason anymore to even venture outside. Nothing to see; nothing to do; only stuff your face at the few businesses that can survive the rapacious rents: pretentious restaurants. They can charge whatever the market will bear, and since half this paper is devoted to breathless reviews of such establishments, they will never go out of fashion. It also doesn't hurt that eating and the celebration of eating has replaced every other form of culture in this society. Even the Romans would be disgusted.
I don't buy the Amazon, Fresh Direct theory of storefront decimation. There are numerous neighborhoods in the City that still have thriving commercial streets and its because the landlords haven't yet come down with a full blown case of greed. Of course, its the brokers too, who are the plague rats in this whole affair. If they weren't constantly goading the landlords for ever higher rents and hence fees, this tragedy would have taken much longer to unfold.
23
It's absurd. On my stretch of Broadway between 79th & 86th streets they just opened a building where rents go from $10,000-$25,000 a month. They're finishing a building where condos go from $3-$15 million. Both buildings are nearly completely full.
And yet with the number of empty retail spaces, you would think it's Manhattan in the 1970s, on the verge of bankruptcy. Let's penalize landlords for holding out. These empty spaces are awful for the city in so many ways.
30
Not complicated - the rent's too damn high! Landlords are getting rich by keeping apartments and store fronts empty and taking the tax deduction for lost income. Couple that with under-the-table AirBnB money and there is no chance greedy landlords will free up apartments at an affordable rate any time in the forseeable future.
Greed wins. We lose.
21
The city has to make it painful for the landlords. If they drive mom and pops stores out of business, they should be forced to pay a hefty graduated vacancy tax that cannot be written off.
16
Up in WaHi there are so many street vendors replacing empty store fronts that shopping areas are looking like developing countries--used household items are spread over several blocks up in the 190s and other areas along the main avenues. I understand why people do this, but it's unfair on the small businesses that are trying to stay afloat who pay rent and taxes for their space.
It's also unfair on renters who are paying higher and higher rents, yet the neighborhoods where they're living are devoid of decent retail, supermarkets, reliable businesses, and businesses serving kids and families, and where the streets look like flea markets and are filthy and garbage strewn, and smell like weed all the time. It feels like we're paying for space to live in, but not to live in a community--I'm sure that happens in some fancier areas as well.
14
You lost me at "WaHi". Please don't expect anywhere near a majority of readers to know where (or what?) that means.
Affectations are just too precious these days.
2
New York Times has described the symptoms but did not diagnose the disease. The empty story fronts are in fact a mirror image of the empty condos in the empty skyscrapers that are dotting the cities around the world. You need real people with real purchasing power to buy stuff from stores. The condos are being constructed not to house people but to hide the vast ocean of anonymous money that is sloshing around the world. Where did this ocean of money come from? Not from work, as no job pays you enough to afford the $ 2 million starter condo, it is the end result of zero percent interest rates and QE for a decade. The people who are living there supported by their jobs don't have purchasing power because all their income goes in paying the rent/mortgage. Soon to come near you, empty schools, because empty condos don't produce children.
44
Let us be VERY VERY CLEAR who gave us Quantitative Easing and ZIRP (zero interest rates)....Barack Obama and his gang of Goldman Sachs alums.
While also not prosecuting one single solitary "bankster" who crashed the economy. (Instead, they all got big bonuses and raises!)
10 years later, and we still have very low interest rates. Unless you have a big deposit at a bank, good luck getting more than 0.15% interest!
THANKS OBAMA!
You can have Amazon and EBAY and PEAPOD or streets lined with shops - you can’t have both.
8
It’s not Amazon, it’s rents that are too hight compared to workers incomea.
There are plenty of goods and services small local shops have to provide in a place where there are many residents. Buy a snadwich, get your hair or nails done..have a beer etc. where? certainly not online!
7
Yup. E-commerce is the main cause of the retail downfall.
Everybody would love for "mom and pop" shops to line the streets, but mom and pop would have to be fools to attempt to compete against Amazon, FreshDirect, etc.
E-media is another primary cause. Record stores, book stores, video stores, game shops -- all of the products these types of shops used to sell are now downloaded online instantly from anywhere. Physical presence is not only not needed, but also often an unnecessary cost. That pattern will only worsen as more and more things become digitized (think what at-home 3D printing could mean for, say, your neat local hardware store).
The demand for retail space simply isn't what it used to be, and it likely won't recover.
1
Amazon and online retailing has eliminated so many small businesses, which were traditionally a source of middle-class income for their owners -- as much or more than were the factory jobs everyone always mentions.
Add to that onslaught some very poorly thought out tax policies and you have a disaster for NYC's once-thriving retail landscape. Sad.
6
I appreciate the qualitative approach this article takes. I also like the way the authors do quote some objective surveys, like the Gale Brewer info, etc.
As someone not living in NY, but an occasional visitor, I have noticed what seems to be a decimation of character in this area in all the boroughs noted.
"... the typical New Yorker is frozen out, and all we get is pharmacies, banks and national brands, and we all lose.”
I am really fascinated at this unburst bubble. How can rents not come tumbling down, and how can there not be foreclosures and tumbling real estate values? Seems unnatural. Is this a symptom of there being only mega-rich building owners?
6
It’s called corporate wellfare via tax write offs for landlords that leave spaces empty.
4
That, plus HUGE tax incentives that let landlords take giant write-offs for empty retail spaces.
2
Rents are indeed coming down. But businesses - art galleries at least - have packed up and gone. Essentially having given up on the city. I can't imagine it's terribly different for many other types of businesses.
https://news.artnet.com/market/why-blue-chip-galleries-are-doubling-down...
It's the landlords who charge exorbitant rents that put the stores and restaurants out of business. Restaurants that have been in business for more than 25 years are shutting their doors, not for lack of customers, but for inability to afford their rents. When a long-time establishment of 20 table closes when it's new lease charged more than double it's former lease raising the rent on a small space to $35,000 a month, blame the landlords. There are so few restaurants still open in my neighborhood, and they are charging $15 for a salad, and $32 plus for an entree, in order to pay the rent. Price gouging by landlords are adding to homelessness, as well. The landlords must be getting tax breaks for vacant spaces. Our elected officials should fix that.
46
They get HUGE tax breaks for having empty storefronts! they can then deduct that against their income from apartments above the stores....rents for apartments are stratospheric!
It is ridiculous to REWARD landlords for EMPTY storefronts, in a BOOM economy -- there was some justification during the Great Recession but that is long over and forgotten today.
5
When the minimum wage hits $15/hour that $32 entree will become a $40 entree, or maybe your favorite restaurant will just close up.
2
Thank you for sharing these photos. They confirm in me a dozen times over my instinct never to visit, let alone live in, New York City.
Why on Earth would people pay for the privilege of enduring all that?
6
Keeping spaces empty instead of adjusting the price to what the market will bear is price fixing.
36
There is no question that on-line retailing has taken a big bite out of the market. How could it not? The excess space will have to be repriced or repurposed or it will remain empty. Landlords will learn that the market has changed and change with it.
1
OK but then wouldn't it cause rents to DECREASE?
In normal (non-manipulated) economic situations....if you see business slowing....you lower prices.
If you cannot rent your space at $35,000 a month....you realize that, and lower the price until you get customers.
Many of these spaced jacked up rents in the last 3-5 years to 3-4-5 times what they had been. They DROVE OUT many thriving businesses. Now they have empty spaces with no rent coming in.
3
“Most landlords are not waiting for top dollar — they’re waiting for good tenants and they’re often willing to take less than market rent." Ugh, such typical broker-babble spin. The "market rent" is the rent that tenants are willing to pay. If 20% of storefronts are vacant, that is a clear indicator that the asking rents are too high. This is 75% due to the greed of landlords and 25% due to a complicit city government that provides tax incentives that encourage landlords to keep spaces vacant. My vote for mayor, regardless of party affiliation, will go to the individual who has the courage to finally do something about this.
56
Our current mayor wants a vacancy tax!
“Most landlords are not waiting for top dollar — they’re waiting for good tenants and they’re often willing to take less than market rent,” he said. “They really care about the city ...."
Nonsense.
52
Given the asking rents, not surprising. And this is particularly true for the "neighborhood" store of whatever type which survives -- barely - with low margins. And those are the very businesses that make neighborhoods,
4
New York City needs more bank branches, drug stores, and women's clothing stores selling dresses for at least $1000 and shoes for at least $500.
The City also needs to raise real property taxes some more, force out more commercial tenants, and allow the real estate industry to take bigger tax losses. Those $25million estates in Southampton coast a lot to maintain.
24
Don't forget that lefty liberal Gubernatorial candidate Cynthia Nixon -- a long time NYC resident -- wants to double or even quadruple the state budget, and raise taxes 200-300% (but only on "the rich", of course).
So add that in.
1
Imo, most of the time, in some way, shape or form, it is landlord greed.
We have a version of it on Franklin St. here in Greenpoint, Brooklyn, ie hi rent blight.
There are many empty storefronts and if rented take yrs. sometimes to rent and sometimes it is only a temporary pop up store.
My residential landlord owns an eight unit bldg here and he bought it when the bldg. was rundown and he almost went bankrupt.
Now with gentrification, he is finally enjoying all the labor he put into the building. Yes the rents have skyrocketed but he has lowered them a bit to help rent them.
He is not greedy like many of the commercial owners are imo.
3
This article is very timely for me. Just yesterday, my husband was reminiscing about all the wonderful hole-in-the-wall restaurants he used to frequent when he worked in NYC in the 80s and 90s. I told him if he went back to New York today, the place would hardly be recognizable to him. Those places could never afford the rents now. As kids, we also loved going into "the City" and shopping at all the small, funky stores. I doubt a single one of them is left now.
43
Traveled to NYC often in the '80s. Reveled in the commercial diversity, especially the small shops and restaurants that were so different from many back in my gentrified Chicago neighborhood of the time.
So tell me, why would I travel there now? Just because it's NYC? I can travel three miles east from my home to the Strip to experience the same type of overhyped, overpriced retail and dining. I hate that rubbish here; I'm sure I wouldn't like it any better there.
15
Would a simple tax penalty for spaces vacant for more than 10 months solve the problem? It might be easier to enact than undoing the tax write-off for vacant units.
56
But what about the landlord stuck with a lousy location that no one wants to rent?
1
There is plenty of blame to go around. As a brick
and mortar business owner I can state the following.
First, tenants pay property taxes. Not landlords. Every commercial lease in this city has pass throughs for property tax increases, which have been dramatic under the Deblasio administration.
For a storefront operator this could easily be the
equivalent of two or three months additional rent
for taxes alone as the lease ages.
New Yorkers claim to love their stores but they use
them less and less. Online delivery of goods and increasingly services erodes enough of a stores sales that is collapses.
The city is evolving into wave consumerism where
we increasingly have longer and longer periods of
slow retail activity fueled by weather events, transportation incidents and among the very wealthy and highest spenders simply leaving town for weeks at at time. It is followed by everyone out
and about spending money. Unfortunately the slowdowns are getting longer and deeper driving even our best mom and pop operators to throw in the towel.
Retail rents are absurd. Owners who bought buildings based on projected cash flows of high
retail rents claim they cant make money to service
their debt. Its true. But some cash flow is better than no cashflow
Imagination is stale .Another juice bar, coffee shop, spin class, nail salon is unlikely to gain the attention of New Yorkers.
Everyone will need to try harder if we want stores.
38
OK, but first you say that "online sources have taken all the business".
But you can't do a lot of stuff online (as one hairdresser says "you can't cut hair on the internet!"). You can't take yoga or spin classes, have your hair or nails done or eat food online. It is PRECISELY juice and coffee bars, gyms and spas and beauty salons that neighborhoods NEED to survive -- otherwise as we clearly see, they became shabby ghost towns.
This is an interesting side of NYC for us out of towners in the hinterlands to see. I thought we had run-down retail in the Rustbelt! ha! our worst areas look like Rodeo Drive compared to THIS mess!
1
Many of these former storefronts were selling things that we now buy online.
It is an evolution in commerce. It is too costly to maintain a physical presence on the block. The next losers are immigrants who made a living before selling grocery items back home in their home country and decided to carrying on the tradition in America. They will be displaced by services such as Amazon Prime same day service and unmanned delivery bots, of which they have already operating in my home town delivery food.
I never really liked those corner stores anyway.
1
That would apply to SOME retail items, but surely not everything.
I've had nothing but problems ordering things like shoes online -- the sizing is never right. You need to TRY SHOES ON. (Sure you can send them back, but what a hassle!)
And how do you get your hair done online? go to yoga or spin classes? get a massage or facial? can you get a coffee online? or a sandwich? or a smoothie?
An analysis of how much food/groceries are now delivered by Amazon would be interesting, but I doubt it is more than 5% of all foodstuffs -- meaning how does everyone ELSE get food? I do not have Amazon prime. I want to SEE my fruits, veggies, meat before buying -- not just get it dumped at my door step. (None of this considers the awful effect on environment of delivering everything INDIVIDUALLY to everyone's apartment -- the wastefulness, fuel, emissions, cardboard boxes, packing materials, etc.)
Anyways, I don't think most of these missing stores were "corner groceries".
3
As a recent small town visitor to NYC I remarked to my host that all the empty storefronts reminded me of my own town. Same problem, different scale; what's a retailer to sell to stay in business? The octopus known as Amazon can deliver to doorstep or locker anything your little heart desires at a cost that is often times less than what Mom or Pop needs to charge to pay the ridiculously high rents. I'd like to see a combo store front of a laundry/deli/bar/fitness group. Amazon has not figured out a way to ship services; yet.
6
I was thinking as I read the quote about not being able to do hair online yet: soon there will be an app which summons a hair stylist, complete with all necessary tools, to your home or business. If there isn't one already.
6
I can thinks of lots of stuff Amazon does NOT deliver.
I rarely shop there; I don't have Prime because it's too costly! I generally find their products are not cost competitive with what I can buy locally. And I don't trust a stranger to pick out my groceries -- not the fruits, veggies or meat!
Can Amazon deliver hair stylists? manicures? dry cleaning? shoe repair? exercise classes? restaurant meals (and I do not mean "takeout")? coffee or juice bars? ice cream parlors? bakeries -- sure you can order baked goods on Amazon, but would they be FRESH? Amazon cannot provide ANYTHING with personal service or a physical need. It's just "stuff" -- mostly crap from China.
2
For those outside of NY reading this: the reason these storefronts stay empty is because unlike apartments, landlords can write off these empty spaces on their taxes, which is more lucrative than renting the space for a few hundred less per month. They have no incentive to negotiate on the rent so they wait it out for sometimes years and finally a Rite Aid or other large chain will pay what they want and then neighborhood begins to look the same: a bank, a drug chain, a fast food chain, a shoe chain, a clothing chain, etc. Then the smaller, mom and pop type places are given five figure rent increases when their lease is up and have to shut down. Then that store remains vacant for as long as it takes for the next big fish to come along. Until then, the landlords lose nothing because they write off the loss of rent.
63
The loophole that the Real Estate industry promotes vigorously is denied to most of us who cannot deduct income we didn't receive from our tax returns but for realtors with their big money and heavy lobbying its a win-wins situation. Neighborhoods and the rest of us pay for their payday and do without local goods and services, everything that made New York the place where one could find or do almost anything day or night.
Also, why and how would any sane small business owner want (or be able) to commit to long-term leases when they are trying to start a business? No bank would lend money for such a ludicrous business plan.
Politicians only seem to be paying lip service to this looming crisis of empty apartments that are investments for foreign money (laundering?) and no street level services, the long view is not happy or sustainable.
15
Actually this is a misnomer. Typically each building is "owned" by an independent LLC for both tax and liability purposes. You cannot use losses from one corporation to offset incomes from another corporation without incurring taxes.
1
If anyone is curious how landlords are doing financially, they can look at John Krauss's wonderful website taxbills.nyc and the associated data analysis that it has generated. Krauss spent several months downloading every single tax bill for all 1.1m buildings in the five boroughs and converted them into an easy-to-manipulate delimited file format.
Anyone can take this data, load it into a database, and do an analysis on how much money buildings are making and how much property taxes they are paying. In buildings with 10 or more residential units, the department of finance requires that landlords report expected income and expenses for the following year and use those numbers to determine their property taxes.
Needless to say, the real estate sector is booming, despite increases in costs and taxes. There are almost no buildings anywhere that are not turning a profit. The idea that vacant storefronts are due to landlords not being able to get enough income to cover building costs is a joke. This is pure greed, and the data doesn't lie.
68
This will eventually end. Who is paying the rent? It's all corporate and most of those businesses have large debts. This won't last forever I would think. It is a shame that the small family owned businesses are going away because of it.
5
great comment - can you post the link to the John Krauss website?
2
So? What shouldn't a landlord maximize the income from his property?
Half of the storefronts around my apartment on 3rd Ave are empty, despite being a well-populated area. One restaurant space sat empty for a whole 5 years. While I don't think landlords should be forced to rent at any cost, it is still obvious that there is some stubbornness and greed driving this phenomenon. (The predicament of Union Square Cafe from a few years ago comes to mind.) I wonder how many aspiring entrepreneurs in NYC have been thwarted by unreasonable rent demands.
28
I bet the restaurants you eventually get will all be chains
5
Restaurants need to rethink the way that they do business. My wife and I travel to Europe regularly, and are just plain fed up with the theatrics of food servers and tipping in the United States. It is keeping us out of restaurants. I would rather spend my money dining out on the continent where I get fair value, even in costly Scandinavia
7
I was under the impression that a law had been passed that would penalize landlords who kept their storefront properties vacant for more than a certain defined time frame? Regardless, in NYC it's the market and not legislators that pretty much determine rentals and how much landlords are willing to wait for before committing to leases. A native New Yorker, I've lived in the East Village for nearly 20 years and the storefronts that have been vacant for more than 5 years, for instance, is a shockingly high percentage. Additionally, the number of new very large rental properties that have sprung up recently will have an effect on the cost of rentals and the products sold in whichever business opens up. Thoughts of how mass transit (the LACK thereof I should say) will be affected never seems to cross the minds of zoning boards that have a free hand in determining the number of new units with no regard for the infrastructure needed to support them. All these factors tie back to the rental situation. In some cases I can only venture to guess that the requested rents must be so high as to make it nary impossible to rent the space in question. This of course hurts the neighborhood in various ways. Still, I'm not of the mind to suggest that landlords be forced to rent properties at any cost either. I believe sensible regulations governing rental properties should have been updated and modernized long ago but cannot imagine that the political willpower exists to achieve this.
3