April 13, 2022
PDF here (reposted with permission).
In the end, dogged niche journalism may be the best tool for understanding New York’s commercial real-estate market. An impressively reported October 2021 feature by Kim Velsey in Curbed concluded that the state of play in this sector is at least as upsetting as late-pandemic results on the residential side:
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… There are more pop-ups, yes, and some new lease structures that might stick around, but retail landlords seem convinced that while there might be a few blips here and there, at the end of the day, the city only ever gets more expensive.
If you’re hoping the trends have improved in the past seven months, then brace yourself for an update from Paula Z. Segal, senior staff attorney at TakeRoot Justice, an organization that provides legal support to New York community groups pursuing equitable ends. “Everything has only gotten worse,” she said.
Segal called commercial landlording in New York “the last unregulated industry”—ironically, a title that art professionals and analysts have been applying to the art market for decades. About half of the city’s residential units were rent-regulated circa 2018 (counting public housing), according to a municipal housing and vacancy survey. In commercial real estate, however, “everything is treated as a contract between equals, and there is no law” to limit price hikes, Segal said. One artifact of this lawlessness is the chasm between the amount of publicly available data on the residential versus commercial property markets. Since state and local governments have no obligations to enforce regulations in the latter, property owners can hoard data with near impunity. Case in point, part of the problem with the NYC Storefront Registry may be that landlords are expected to self report their quarterly data or else face… the meager threat of a $500 fine. The information asymmetry puts landlords in a position of extreme power. The harder it is for the consumer to even understand the severity of the problem, the harder it is to mobilize a coalition for change. No wonder so many galleries and other small businesses here still experience the hunt for new space as a hellish trial.
Read the full story here.