Curbed: Most Storefront Rents in New York Are As High As Ever

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After months of hearing about how the pandemic had laid waste to New York’s retail landscape, leaving shuttered storefronts and desperate landlords, Marvis Burns thought that he’d have no trouble finding a larger space on 125th Street. He and his wife, Violet Santana, are the founders of My Wellness Solutions, a holistic health center with locations in the Bronx and Harlem — his Harlem lease was up, he was in an older building with maintenance issues, and he needed more space. But when he started looking this spring, rents had hardly budged from pre-pandemic levels. In fact, the lease terms were worse, because most stipulated that, in the event of future pandemic-related closures, even mandatory shutdowns, he would be responsible for the full rent. Even so, Burns was close to signing a lease for a space on 125th Street when the landlord threw him over in favor of a national retailer willing to pay more. “I stupidly assumed it would be easier. If anything, it’s been harder,” he said.

Though retail asking rents plummeted in swanky shopping strips like Fifth (between 42nd and 49th) and Madison Avenues (rents fell about 25 percent in those districts between spring 2019 and spring 2021, according to the Real Estate Board of New York) — and in tourist areas like Times Square and Soho (in the latter, they dropped 37 percent between spring 2020 and spring 2021) — it was a different story in many of the city’s neighborhood shopping corridors, where the majority of the city’s smaller businesses are located. The retail asking rents on Cobble Hill’s Smith Street, for example, were $83 per square foot the summer before the pandemic. Now they’re $89 — a slight increase. On the Upper West Side on Broadway between 72nd and 86th Streets, rents fell about 10 percent in the first months of the pandemic, to an average asking rent of $239 per square foot according to REBNY, and as of this spring were holding steady at $240. Though the numbers fluctuate slightly by season and shopping corridor, the overall story is the same: Despite the closures and the changed nature of the city — despite everything — it costs about as much to rent a store in most neighborhoods as ever.

Even before the pandemic, commercial leases in the highest-priced areas had, broadly speaking, peaked in price at the end of 2015 and begun to drift downward; in most other neighborhoods, they were continuing to rise, albeit slowly. (The difference was that rents for Fifth and Madison Avenue flagships didn’t correlate to the stores’ profits; they were for advertising purposes, and advertising changed.) Then the world changed in early 2020 — but those trends held more or less true, after a brief shudder. “Rents came down for, like, a month or two, and then everyone started trying to make up for what they lost,” said Paula Segal, an attorney with TakeRoot Justice, which offers legal services to small commercial businesses through the city’s Department of Small Business Services. “Landlords are demanding increases on renewals. I haven’t seen anyone who is signing a lease for less in 2021 than in 2019. There might be some concession in the first year or two, but then it’s a giant jump.” Segal is currently working with a Lower East Side restaurant that for years has been paying $1,500 per month for a 750-square-foot space. The restaurateurs have offered to pay double that amount. But the landlord will only accept $3,000 for the first year, then jump to $6,500 for the next and then, a few years out, to $8,500. “That kind of escalation will put them out of business,” Segal said. “We represent a lot of small businesses — watch-repair shops, small manufacturing spaces, Tibetan restaurants — and this is a story that’s endemic. At the end of the day, it’s standard operating procedure in this town [to ask for a big increase at renewal], whether the landlord is an HDFC or Thor Equities.”

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