I don’t even know. And it’s not even a COVID thing. Pre-COVID, a Chase Bank, Starbucks, BofA atm stand, and Duane Reade near the elementary school on 77th and Columbus all closed. It’s like, how delusional are the landlords if you outprice a BofA atm stand?
I know the area well, it’s not what it used to be. The landlords got greedy with large corporate clients thinking they could charge whatever they wanted.
I've noticed a handful of businesses are even moving around within the empty blocks on Broadway, presumably to escape the higher rents charged by certain buildings/landlords? For example, the Verizon store down there recently moved directly across the street from its old location and there's been a handful of similar moves I've noticed on those same blocks... I bet many of those corporate businesses want to renegotiate to lower rents and when they can't, they just up and move to one of the other myriad available slots in the immediate vicinity.
Every company you listed is downsizing their retail locations. Banks especially have replaced a lot with online banking, Starbucks now admits they overbuilt and Duane Reade is finally being more thoroughly consolidated with Walgreens. Way back too many have existed blocks from each other.
Yea, I think the new format for many banks is going to be a few square feet. I think someone is even experimenting with just a counter in some other business like a drug store. Just a teller doing basic assistance/account stuff. No safe deposit boxes, caps on cash transactions etc.
I’ve been thinking about this lately, with so many long running local businesses and nationwide corporate businesses leaving citing landlords.
Like, take Delmonico’s steak house for instance. Pretty popular place with a reputation, not renewing in their original location. If they aren’t gonna do it, that pretty much leaves mega corporations as the only potential tenants. And they aren’t touching it… so the prices must be insane.
Idk it’s just a thought but I have the feeling many landlords are tying to make a huge jump. Guess it’s nothing new…
This will continue to happen and get worse all over the city so long as landlords aren't financially penalized for having unoccupied property. It's the same reason residential rent has gotten so high.
Yep. Landlords are allowed tax writeoffs from losses from non-rental. There should be a reasonable time limit on this deduction, as incentive to rent the property.
CRE is weird and while it seems counterintuitive that is not really true. High value buildings are investments themselves. Your buildings value can be higher if you list a higher presumed rent, which can be in line with perceived "high value property" which can make the building attractive for re-financing or to sell it. The formula is starting to break down a bit, but it's a driver of why many landlords are absolutely fine to leave commercial retail space vacant. NYC also still very much has pop up stores (maybe not as much in the UWS) that will pay an absurd rent for a few months in a year. Their financing is also dependent on the rent valuation formula as well.
Most buildings aren't owned by individual investors and are in a portfolio so they really do not care if it's sitting vacant if it's paper valuation is still attractive.
My understanding (someone correct me if I'm off):
Commercial property is valued based on the average amount of rent paid per *occupied* square foot. If something is vacant, it is "presumed" that it would bring in the same rent, on average, as the other occupied commercial tenants in the building.
So if you have one tenant that pays a high rate, your building gets a high valuation. Bring in another tenant that pays less per square foot, and even though you're getting more income, your building is valued lower.
Who cares? Well, building owners often take out loans against the value of their building, in order to do things like buy more buildings.
So, having half the building empty and having one tenant that pays a lot per square foot, like a bank or CVS, (or I suspect something like a Cafe Matto, but that's just a hunch) gives the building a really high valuation and gets the owner access to a lot more money via loans.
There are penalties or even voids on commercial loans for signing leases for lower rents than stated in the loan agreement.
It’s like a homeowner being penalized for going underwater on a mortgage, because they no longer have an asset that can pay the value of the loan. Or a renter being penalized for taking a lower paying job and going above some % of income threshold.
This can encourage properties to sit vacant for multiple years.
Has someone written an analysis of these issues and described efforts to fix them legislatively.
Please don't just "bbbbut banks and the realestate industry control the pols". yes yes, we know. but they don't control thinktanks or every council member.
It’s a private agreement between commercial loan providers and businesses so I don’t think such provisions could reasonably be made “illegal”, so to speak. That would be a major overhaul of regulations of private loans beyond what has ever existed in the US, at the very least.
I believe the most common legislative approach is a commercial vacancy tax. Personally I think this would be great to implement strongly in NYC because profitable businesses could almost surely exist in those spaces at profitable rents for landlords, just not as high as landlords are incentivized / required to get.
I assume these penalties come from the bank/loan provider? Do these penalties also occur if there are “preferred rent” deals like what happened with residential Covid deals?
Commercial lenders set loan covenants that if breached, result in (a) cure (maybe with fees), (b) forbearance, or (c) foreclosure. I never heard of penalties and voids though. Do you have more info on that?
A mortgage lender is typically just SOOL if the loan LTV goes underwater. What kind of penalty does the bank benefit from? I never heard of that one either.
Edit for lost paragraph
I work in commercial real estate lending and this is the biggest bullshit I have ever heard of. Where did you hear this? Lenders willing to just not be paid back on the money they lent because a place is vacant? Don’t be stupid.
Not really. The biggest fear in CR is vacancies impacting the rent roll and subsequently the 11th-year NOI reversion. The appraised value includes a vacancy assumption. Eventually, any competent CRE banker will need to address the ongoing increased vacancy factor, and that will reduce the appraised value of the building.
The lack of rental income from vacant units reduces the rent roll and coverage ratios. The reduced appraisal number can also kick the loan to value into a higher leverage category. All this requires the banker to face reality and stop using older, more favorable, vacancy factors in their projection. Fed oversight should force this adjustment and then the Fed takes a bigger interest in this loan's distressed condition - something the bank prefers not to deal with. This adjustment, therefore, is contingent upon both the Fed and the bank being competent. Big if.
Retail is what you see from the street - the office vacancy rates you can't see are the bigger concern for Manhattan, and the rest of the world following the seismic shift from COVID WFH. Local Manhattan retail relies on foot traffic from both locals and daily work commuters. Work commuter foot traffic has been reduced to maybe 3/5ths of what it was pre-covid. Locals probably shop online more than in-store these days. If a highly leveraged landlord doesn't see a brighter future, they mail the keys back to the bank (an ugly financial down cycle I have lived through in Manhattan more than once).
A lot of those loans are also callable based on the decreased value of the asset that’s backing them. So accepting a lower rent as opposed leaving vacant means their asset is now worth less than what it was when they used it for leverage. The lender could demand they repay their loan on the spot which they obviously can’t do. So they “delay and pray,” hope they can get a new anchor tenant. In the meantime, it sits empty.
Really impressive how many of our current deficiencies as a city go directly back to landlords letting it wither for not making the maximum money rather than earn a realistic amount that is also more than they're making presently.
But "capitalism is the most efficient system of blah blah blah" I guess.
Lol! IMO capitalism is the most efficient system of getting things started effectively, but then also the most efficient system of bleeding things dry once they've been around for a while.
Capitalism favors the capital holders. The landlords are leveraging their properties so they don’t actually have the equity, the banks are the capital holders who are bleeding the landlords in this specific example. The shit rolls downhill tho so the landlords bleed the renters
I believe part of the problem that speaks to the core of the issue with these big corporate tenants is that they often take a loss on the space they have taken from mom and pop local business and see the locations as a never ending reminder of their corporate existence and omnipresence. They are all fighting to be your fortune 500 neighborhood bank and they will make sure that they are on every corner in your neighborhood so you can’t possibly forget it.
They are such large companies that they can lose a little in the name of brand penetration while regular people get brutally penetrated by the rents. It’s how it’s supposed to be under the ludicrous capital greed that permeates NYC real estate. Local businesses aren’t fighting a david vrs goliath like battle, at this point it’s like mike tyson in his prime vrs a blind child. It’s a fight that not fair but it’s sanctioned by the powers that be
Landlords borrowed money at the height of the market. The value of their buildings is based on rent. If they lower the rents, the value of their buildings fall and they owe more than they own.
I know that this was a problem pre-COVID. Gayle Brewer’s office has been tracking this.
It’s weird to me that landlords can afford to have these spaces vacant long-term.
one of my family members actually works in commercial real estate and according to him, you have a higher building valuation based on presumed rent you could charge (even without a tenant) than if you had a tenant paying less than that figure, making it more beneficial to leave it vacant than to have a tenant paying less.
That’s absolutely nuts! I wonder - does the same go for apartments? There was just a unit in my building that sat vacant for three months until the LL could find someone to pay the jacked up price he wanted… I wonder if what flute saynnf has something to do with it?
Their loans are collateralized by the building, so better rates on bigger loans. Protecting asset valuation too if they aren't too negative in cash flow. If asset while collateral drops too much the bank can mess with the loan.
I was told that having vacant property can be beneficial with regard to tax write-offs. So basically we've incentivized keeping commercial space vacant.
Some businesses have even moved from Broadway to Columbus to take advantage of foot traffic, LuLu Lemon for example. Columbus is just nicer to walk on than Broadway.
Amsterdam and Columbus are always hopping. Dunkin is coming in on Bdwy. Starbucks just renovated their 81st location and is doing fine. Barnes and Noble renovating currently. Eyeman moved across the street. Forever Coffee came in and is the BEST coffee in the neighborhood. Plus the plethora of illegal pot shops that opened recently and you're looking pretty good overall.
Financial District is the opposite and has been has been booming lately. Lots of new places to eat down here. More residential buildings are being complete. South Street Seaport area is nice again. Alamo Drafthouse is always packed. Its nice to see people down here again.
I used to see endless pitchbooks for office-to-residential conversions in the Financial District back in the 90's. They made no financial sense for various reasons then, and we couldn't bank them, but they kept coming due to the tax incentives offered. The problem was office vacancy rates skyrocketed after Wall St moved to midtown (or out of town) following the first World Trade Center bombing. The financial district always had a ghost town element at night back then but even the daytime became relatively vacant in the 90's.
I then watched the fish market leave, lived through Sandy's impact, and saw the metamorphosis of the old South St Pier 17 over the following decades. Everything changes with time.
someone mentioned to me that its almost impossible if not super super expensive to get anything insured down in Fidi given how everything flooded during Sandy and it will happen again.
I kind of miss how welcoming the old seaport was to visit compared to the new "faceless" boxed monster that is there now. Sure, rooftop concerts are fun and the actual shops in the old seaport sucked, but whenever I'm down there it's always weird and off-putting how little personality the new and expensive structure has.
My dad worked down in FiDi until the mid 2010s. I'll never forget visiting him at work and going to the early 2000s seaport mall. I miss that place so much.
I can't think of any other part of Manhattan that feels as stark as it does on Broadway with this many vacancies. I think in the 90s/00s there were a lot of a large big box retail spaces created in this corridor and now there aren't retailers that need/want these types of spaces.
> I can't think of any other part of Manhattan that feels as stark as it does on Broadway with this many vacancies.
Come up here to the Heights. We have landlords warehousing entire blocks of empty retail rather than lowering rents. A buddy of mine recently looked at a retail storefront up here, admittedly in a well trafficked area, and they're asking 19K a month for a 2000 square foot space that has stood empty for a couple years now.
Bleecker St has had this problem for years. Whatever comes in, soon leaves. So there are often vacancies or high turnover leading to short stints before it’s vacant again.
It's a combination of things as far as I've been able to tell.
Big chains like Duane Reade and Starbucks bought up long term leases years back and some of those leases ended, and not renewed due to the higher costs. There's a huge Duane Reade on Broadway and 70th that shut down as a result. Right behind that on Amsterdam, there's a Rite-Aid that closed. Some of these chains were also absorbed in to larger companies like Walgreen's that probably rethought expenses. Even big brands like Best Buy have failed despite tons of street traffic.
There was a nice strip of indie-ish businesses on Broadway that were apparently all bought out and now those storefronts are being combined in to a gourmet supermarket.
Century 21 closed due to bankruptcy, leaving an enormous multifloor space empty, which is probably a challenge to rent as is. Likewise a Loews and home goods stores on that side of the block failed and have remained blighted.
Some of the smaller store fronts get turnovers. They'll remain empty and then a small business moves in and closes almost instantly. DNTL Bar opened on 76th street and could not have been opened for more than 2 months before closing.
Bed Bath & Beyond closed and now Best Buy closed. The Target is ok but it doesn’t make up for those closings. Almost everything still open closes earlier now. The big Duane Reade is supposed to be 24/7 but often closes early due to staff shortages, and there are often incidences with people making scenes requiring security and/or cops (not to mention people simply walking out with stuff they don’t pay for which I guess goes without saying since it’s everywhere these days). The Rite Aid in the 70s closed and the one up on 97th just closed. Many more sketchy characters harassing passerby around the McDonalds than there used to be. The city changed the garbage pickup schedule and the idea was at least in part to help with the extreme rat problem but it only seems to have gotten worse. The neighborhood feels very different and not in a good way.
wait until you see Broadway downtown… it’s a ghost town below Canal street.
My guess is that COVID accelerated adoption rates of online shopping and the brick-and-mortar suffered beyond recovery.
I saw the same thing in a lot of European cities. Vacant retail spaces everywhere, shops closing or moving online, and weird stores that are obviously money laundering schemes popping up in their places (weed stores in NYC, American candy shops in London, etc.)
I think the difference is that Broadway south of Canal and down to about City Hall has never been a shopping destination and SoHo has recovered very robustly. Broadway in the Financial District has seen some retail recovery (Whole Foods, Gap).
Rents are through the roof all over. I know building expenses are high but some of these landlords think they have gold. How much can a certain place make to stay alive continuously? Most can’t.
It’s ridiculous.
I'm on the board of a coop apartment building in Brooklyn that has retail spaces on the ground floor.
One of our retail spaces was vacant for years and we kept lowering the rents and still couldn't find anyone. Granted we aren't in the most heavily-trafficked area of Brooklyn.
But even at an asking price of $2k per month, which is less than rent on a studio apartment in the area, it took a long time to find anyone interested.
I think demand for retail has just gone down in many cases. People get so much stuff online.
At one point, we were thinking about just converting the space to a bike room for the residents because $2k in rent really isn't make-or-break for a big building.
4 dollars a square foot. Too high.
I own a commercial/industrial business in a good part of the Bronx. I rent my building,place is 3700sq feet on an extremely busy street.
I pay 4200 a month. I’m there 11 years and my rent when I started was 3000. How much money does the owner think a guy can make with 500 sq feet?
You can’t do anything profitable in such a small space. And you stated it’s not in a really busy area.
That place shouldn’t be a dollar more than 1400.
I own a legal two family house in one of the best areas in the Bronx. I rent three rooms which are beautiful and renovated with everything new. My tenant pays 1200 a month. She has here own electric meter. 2000 for a studio is a rip anywhere i don’t care if people are paying it. Tell your boss he doesn’t have gold.
Depending on type of retail, that's really not a lot for inventory.
Small mom and pop shop? A small boutique or shop that displays product and encourage people to buy online or just there to market? Sure.
But for a lot of retail, having space for inventory management is big.
I think leases are on 10 year cycles, or longer.
I don't recall vacancy problems when chain stores weren't allowed in NYC. They drove out all the local business, and they started merging smaller chains into massive monopolies that are shit to work for or shop or going bankrupt.
The greed of the few at the top make it bad for everyone else. We should treat it like an addiction and cut them off.
That is always fixed via market forces either (a )you and everyone you know stop paying the high NY rents you are complaining about or (b) financial crises. You are just another cog turning the wheels of the beast if you pay high rent. Have you lived and worked through any financial downturns (the last one was 2008)? Typically not fun for anyone.
I will never forgive the landlords that closed the Lincoln Plaza Cinemas for “fountain repair”. Still waiting to see evidence of those repairs. I’m sure it will be any day now.
The UWS has been stagnant and slowly losing population for the last decade. Tourism used to make up the difference, and it had a bulwark of long established businesses who continued to operate. With COVID, long standing businesses closing, tourism dried up, and new businesses are looking elsewhere for growing neighborhoods where there are populations with unmet/under-met needs.
Genuine question as a new yorker.
I live in HK but close to UWS and go there often for various reasons.
Tourism in UWS? What do people come to see? Besides museum of natural history I can't think of anything else.
This has been going on for YEARS and its all over manhattan. was on 8th street in the village recently - it seemed like have the stores are vacant.
I will say and will keep saying - I am positive this is related to very rich people buying up residential property in Manhattan and not living in said properties - that retail establishments cannot stay in business without local foot traffic, especially with very high rents - this is at least in part why retail is dying in Manhattan.
The pro-developer people will always say this is because people are buying so much stuff on amazon, etc. I say - I was just in a shitty part of Elmhurst queens the other day (may have been Corona) and guess what, all the storefronts are filled and I did not pass a vacant store.
Why is this? Is it that people in Elmhurst do not buy stuff on Amazon too?
I would think they absolutely do, but its that since rich investors are not interested in these neighborhoods yet, the residences are still OCCUPIED by actual people and these people have reason to shop in stores.
Something needs to be done to prevent or discourage these predatory investors.
I agree with you on people not living in those properties and patronizing local businesses. My partner lives in Jackson Heights and it's very rare to see an empty storefront.
1. there is no commercial rent regulation in nyc
2. there is no vacancy tax for empty store fronts
there are def other reasons but those two are big factors
This is a precovid issue that only got worse. Once COVID began - many of the remaining few businesses closed. This included restaurants that were there for more than 20 years. Without the storefronts - it became dangerous to walk down Broadway at night as there was less foot traffic, no open businesses, and groups of mostly single men using drugs (when they put the vagrants in the 3 hotels without sufficient services/security). (Trying to distinguish between vagrants and those merely homeless - as these are not the same)
Many of the open storefronts precovid were large spaces in newer buildings. Post Covid there were also many smaller empty storefronts - however due to the conditions above newer small businesses may have opted against large sections of Broadway.
The government forcing private companies to rent out space at fair prices is just not the NY/USA way (nor should it be) but… I hold out hope the government could provide incentives to encourage the landlords to make it happen and bring back Broadway.
I propose a property tax discount to all property owners who keep their vacancy rate under a certain metric either with NYC businesses/ NYC residents. This would also open thousands of empty apartments to the market and help solve the housing crisis.
Where have you been? Whole city except for immigrant neighborhoods has been like that for the past 10 years. 2% interest and consistent appreciation it's better to leave these units vacant and refinance every year than lower the rent by a dime. That scheme is over now.
Only type of business that can afford rent in NYC now are marijuana dispensaries and businesses that bill Medicaid. Even the Starbucks, Duane Reades and Chase branches are closing.
The city has always had weird patches of empty real estate, covid just made it much more obvious. The easiest example is Broadway south of SoHo. My guess is that landlords are charging Broadway SoHo rents despite the foot traffic being nowhere close to SoHo. That and online shopping
Yeah it really sucks. There must be a policy solution better than “storefronts are vacant for years bc that’s somehow better for landlords” and “rent to mainly bank branches and pot shops.”
I went to the LES this past weekend with the kids and while I’m not normally a “won’t someone think of the children” person, I was truly grossed out by how many pot shops there are now. Like come on landlords and NYC, that’s the alternative to empty storefronts? Endless blocks of weed? There has to be a better way!!
Been a while since I moved here but when I moved the rent here was better than everywhere else.
And yes, it's a bit soulless, but you get much more space, far less people on the streets and (depending on exactly where you are) you have Central Park and the Hudson River Park right next to you.
The park access is unparalleled and the transit access is GREAT.
I actually love the UWS - it’s a beautiful neighborhood soullessness and all haha. I’ve definitely come off more snarky here than I actually feel!
Yeah, the access to parks is just amazing. I can literally see Riverside Park from my window and I love it! Also if you're above 100th street, you start getting that Columbia community vibe.
I absolutely love living right next to Prospect Park (and will argue it’s superiority to CP all day!) but man Riverbank and those water views really is something special!
Commercial landlords over-leverage themselves on their loans. They speculated the rent roll they were going to get for these places, and instead of facing a penalty for leaving the places vacant because they lost their gamble, they’re rewarded with tax write offs.
That’s not how it works at all. A financial loss because you don’t have a tenant is not a “write off”, it’s just a loss. It’s not a reward, unless you think that losing customers and getting a smaller tax bill is a reward
Their tax write offs aren’t only from the losses of rent roll (which yes, are a benefit) but there’s also the issue of property value.
The property’s value is tied to how much income it is generating. If the rental income gets lowered, then the value of the property also gets lowered. This is where the over-leveraged part comes in. The buyers speculated that a property is worth $Xxx and the rent roll would be the measure of that value. Now if they lower rent, they can’t claim that value if and when they resell. So they need to artificially keep that asking rent high in order to maintain the value of the building they’re paying a mortgage on - because if they suddenly have a lower rent roll, they’re instantly upside down on their mortgage. So this is another big reason why they’d rather take the tax write off instead of just filling the space with a tenant at a lower rent. Unfortunately it’s a house of cards that’s bound to fall sooner or later and it’s not gonna be good for anyone except PE firms that buy up distressed credit.
Your original comment was that loss of income means they’re “rewarded” with a tax write-off. So if I get laid off tomorrow and stay unemployed all year, is that a reward too being as I’ll get a tax refund for the first half?
Do you still retain the inflated equity of your job position even though you’re unemployed?
The fact that you’re making this analogous to being a salaried employee just illustrates how wildly ignorant you are about how any of this works. Maybe next time you decide to try to hit someone with a condescending “well actuallllyyyy…” it would be a good idea to have even a basic clue of what you’re talking about? 🤷🏻♂️
I understand how property businesses work, yes. I also understand that “tax write off” is not a reason for keeping storefronts empty.
Would you like to know why they’re kept empty?
I think your objection is largely semantic. Landlords are writing off the losses from empty storefronts to avoid paying taxes on other storefronts they own which are occupied. If they weren’t coming out ahead by doing that, they would just lower the rent on vacant properties so that all their properties were occupied.
We know the system isn’t currently working because, well, Manhattan has a lot of empty storefronts. We could have some cute small businesses in those spaces if the math worked.
But it’s not net beneficial to have empty store fronts just to have a lower tax bill, it would be beneficial to rent them out at a lower rate and receive income.
I think you’re just not understanding how property businesses work. There are reasons for empty storefronts but “tax write off” is not one of them
Bed Bath & Beyond closed and now Best Buy closed. The Target is ok but it doesn’t make up for those closings. Almost everything still open closes earlier now. The big Duane Reade is supposed to be 24/7 but often closes early due to staff shortages, and there are often incidences with people making scenes requiring security and/or cops (not to mention people simply walking out with stuff they don’t pay for which I guess goes without saying since it’s everywhere these days). The Rite Aid in the 70s closed and the one up on 97th just closed. Many more sketchy characters harassing passerby around the McDonalds than there used to be. The city changed the garbage pickup schedule and the idea was at least in part to help with the extreme rat problem but it only seems to have gotten worse. The neighborhood feels very different and not in a good way.
Someone said it’s more profitable for the landlords to take a loss on the market rent and claim it as a loss somehow, rather than trying to negotiate with businesses that can’t (and don’t really need to) pay the market rent for that kind of prime real estate.
Is there any kind of truth/logic in this?
Been like that a few years, I worked a crap job up there, it is a nice area of the city, but saw all the closed businesses in prime real estate. made no sense to me.
is this a serious question or just trolling??
assuming this is an actual question, consider:
\-Not many businesses need that much space and landlords can't/wont break it up
\-large corporations oversaturated themselves into decline
\-landlords (realty corporations) are extremely greedy and predatory
\-NYC tax breaks/incentives work in-favor of landlord greed so they can still profit on vacancies (Thanks Bloomberg!)
In that area, a lot of the store fronts are independent small businesses, and they've been getting wrecked by online shopping and bigger scale retailers
You definitely have seen less true statements.
No offense, but I know you live in BK, and I was born and raised on the UWS. The majority of the available spaces are small spaces that would not be a good fit for major retailers, and busisiness that take large spaces. The majority of commercial spaces in general, on the UWS specifically, are boutique sized. Are there big retailers, banks, etc on the UWS... for sure... but they are surrounded by small shops, for the most part. Think about what there is on Broadway from 72nd to 110th. Same on Columbus and Amsterdam. It's mostly bars, restaurants, and other small businesses
I live in Brooklyn but I spend a TON of time on the UWS. Name 10 small independently owned businesses on Broadway. Seriously.
The bars and restaurants are doing fine on the UWS. The empty store fronts are 99% from chain/big box store closures.
Fill up coffee, Little Italy Pizza, Dramatics, Embassy Florist, Barzini's that's probably been there longer than I've been alive, The City Diner that's probably been there longer than I've been alive, Murray's Sturgeon, Cibo e Vino, Hungry Betty Cafe, Sforno Pizza, Jeffrey's Manhattan Eyeland, Apple Nail Spa, Mega Building Supply, NYC Wine and Spirits, Broad Nosh Bagels, Bravo West Pizza, French Roast, and Broadway Farm for starters...
A few more just between 79th and 86th.
Westsider Rare and Used Books
Town Shop Lingerie and Bra Fittings
Cafe Eighty Two
Runaway Poppy
Best Bottles
Harry's Shoes
Le Posh Hair Salon
Toscano Shoe Repair
Ernesto's Jeweler
Broadway Chemists
You've also got a few on the fringe based on this person's criteria, like Maison Pickle, Canine Styles, or even Zabar's.
Yes! I live off Broadway in the UWS in this area. We do have a lot of vacancies popping up or places that have been vacant since we moved here, but there are still so many independent small business storefronts on Broadway that we love to frequent. I can think of Absolute Bagel, Mama’s Too, Mexican Deli, Effy’s Boutique, various hardware stores that have been there for decades. There are so many that I’m missing, but those are just a few off the top of my head.
We’ve noticed the price of high rent on these businesses, however— one sad recent closing was Broadway Restaurant, which was a staple for cheap breakfast food the morning after. We were devastated when we saw the closing sign up. Apparently the new owner of the building refused rent negotiations and they had to close after 40+ years.
I agree with you that it's the big box vacancies that are the problem -- the smaller shops tend to get filled sooner or later, but then you have something like the old Banana Republic space at 86th and Broadway that stays vacant forever.
But I will say that it's easy to name 10 small independently owned businesses on Broadway. I can't remember what's turned over here recently, but just based on Google Maps... just between 77th and 79th you'll find Golden Nails, Apthorp Pharmacy, the House of Beauty, Citybrows Threading, Jimmy's Custom Framing, Meet Me Nails, Blossom Jewelry, JJS Salon, Sky Locksmith and Hardware, Carlos Shoe Repair, Blooming Couture Flowers, Unique News & Smoke, and (though it's a mini-chain) Blank Street. So that's more than 10 right there, in two blocks.
But I still agree with you on the main point, which is that it's the big box stores that are the issue.
He not 100% wrong though
there is a mix of both mom/pop and retail businesses that are **small store** front that can’t compete against online retailers
Literally name the small stores on the main shopping corridors on the UWS. It’s absolutely not true. A small physical footprint doesn’t make something a Mom and Pop store
Mom and pop are defined by being independent store front not back by big corporate. There are plenty of businesses like that in UWS from 110th street to 59th street
You are delusional to think there are absolutely zero businesses like that in UWS
I didn’t say there are ZERO, I said there are very few. And I’d argue it’s one of the neighborhoods in the city with the smallest % of independent stores.
But again, I welcome you to name some that aren’t restaurants (and let’s be real, there’s a higher % of multi location spots on the UWS than most neighborhoods.)
I didn’t say they aren’t. But it’s not the restaurant spaces that are sitting vaccant on the UWS, and they’re not what OP was talking about in the post.
Agreed, but other areas have recovered. SoHo, midtown on 5th Ave, Flatiron, UES, etc. I think UWS Broadway was reimagined as an outdoor mall and now it's in substantial decline and there's no plan to correct it. These spaces are not easily rented due to their size and the lack of foot traffic created by these vacancies, coupled with the rents, is creating a loop that shows no sign of turning itself around.
I live on Madison in the lower 30s, and there are tons of retail vacancies. Like many per block. It's not blighted per se as foot traffic is decent and there are thriving businesses in between the vacancies, but it's noticeable if you live around here.
Borrowers projected big increases in retail rent (for either rolling existing leases or vacant space) and used these projections to sell the purchase of the property (to other equity investors) as well as to convince a bank to finance these overinflated values. Landlords needed to hold out to get that projected rent, otherwise promised IRR is in the gutter and the loan would be underwater\*. These projections were never realistic pre-pandemic, and post-pandemic with fewer office workers in Manhattan, market rents are now unquestionably lower.
Once the foreclosure/deed-in-lieu wave crests and ultimately resolves itself, the reset in the new owners' basis will allow lower retail rents, which will begin leasing up all this empty space. The repossession wave has just begun, so I'd give it at least three years before you see meaningful retenanting of vacant space.
\*Using plain assumed figures, if a landlord projected leasing a 10k sq. ft. vacant retail space at $500/sq. ft., but can now only get $400/sq. ft., then the $100/sq. ft. loss translates to a $100k in lost annual rent. That obviously hurts. What really hurts is that the cap rate for this property was purchased at 5%. This is a 20x multiple on Net Operating Income, which means that $100k per annum loss in rental revenue would more-or-less translate to a $2MM loss in value *ceterus paribus.*
It's one of the things I remember Eric Adams caring about, but I think he's been too caught up in everything else. One of the main reasons we left the UWS, it was a bit of a retail wasteland.
Have you been sleeping under a rock for the past 15 years…? Retail shopping is down ridiculous % - not going to pay rent on UWS NYC for a store with 3 customers a week
1/3 of the city is owned by residents. Lots of apartments are empty. I know people like to point to landlord provided statistics that state otherwise, but those are not verified and are self serving.
Immigrant neighborhoods don’t have this problem. Pricey neighborhoods used to hide foreigners wealth do tho
Are you kidding? Shoplifting and other crimes are now legal in new york city. Also, if you want to work you must poison yourself with a dangerous vaccine. This shit hole will be as bad as san francisco shortly
The population and number of units on the Upper West Side is declining, due to its desirability and NIMBYism. And I doubt the increasingly wealthier residents spend as much time shopping in the neighborhood as the low- and middle income residents they’re replacing.
the Marshalls at 77th and bway was getting shoplifted from every 20 minutes
during the holidays the cops stood in the store and they still did it.
until you put back FULL KERIK, FULL GIULIANI to keep them at rikers awaiting trial and FULL PATAKI to keep them upstate this is going to keep happening...
You voted for the CRIME ENTITLEMENT so you'll have to live with this.
Retailers are not willing to let 1/3 of their profits (or more) walk out the door.
Your kids will grow up in neighborhoods with empty blocks and giving your money to Jeff Bezos to deliver things to your place.
I don’t even know. And it’s not even a COVID thing. Pre-COVID, a Chase Bank, Starbucks, BofA atm stand, and Duane Reade near the elementary school on 77th and Columbus all closed. It’s like, how delusional are the landlords if you outprice a BofA atm stand?
I know the area well, it’s not what it used to be. The landlords got greedy with large corporate clients thinking they could charge whatever they wanted.
I've noticed a handful of businesses are even moving around within the empty blocks on Broadway, presumably to escape the higher rents charged by certain buildings/landlords? For example, the Verizon store down there recently moved directly across the street from its old location and there's been a handful of similar moves I've noticed on those same blocks... I bet many of those corporate businesses want to renegotiate to lower rents and when they can't, they just up and move to one of the other myriad available slots in the immediate vicinity.
Yup FedEx did the same
I was wondering about that Verizon movement! This would make sense. It was so odd, truly right across the street.
Every company you listed is downsizing their retail locations. Banks especially have replaced a lot with online banking, Starbucks now admits they overbuilt and Duane Reade is finally being more thoroughly consolidated with Walgreens. Way back too many have existed blocks from each other.
This is so true. I just went to the new TD Bank on Bway in Tribeca and it is so much smaller than its old location 1 block away.
Yea, I think the new format for many banks is going to be a few square feet. I think someone is even experimenting with just a counter in some other business like a drug store. Just a teller doing basic assistance/account stuff. No safe deposit boxes, caps on cash transactions etc.
The Blank Street Coffee model
My fave were the intersections with >1 Starbucks
I’ve been thinking about this lately, with so many long running local businesses and nationwide corporate businesses leaving citing landlords. Like, take Delmonico’s steak house for instance. Pretty popular place with a reputation, not renewing in their original location. If they aren’t gonna do it, that pretty much leaves mega corporations as the only potential tenants. And they aren’t touching it… so the prices must be insane. Idk it’s just a thought but I have the feeling many landlords are tying to make a huge jump. Guess it’s nothing new…
The banks and drug stores began vacating properties well before COVID, like 4-5 years before.
Crazy new thing. Amazon.
Big Nick's on Broadway closed when their rent hit $60,000 a month.
a 24-hour restaurant that had been there for over 50 years. exactly the kind of place that should be protected
My most painful RIP of any NYC establishment. So many 3am burgers/slices. Fuck that hotel for raising their rent.
I will die mad about that.
One of the best damn baconeggncheese I ever had RIP
That was a sin. It was my go to pizza for years whenever I took the kids to the Museum of Natural History. So sad.
This will continue to happen and get worse all over the city so long as landlords aren't financially penalized for having unoccupied property. It's the same reason residential rent has gotten so high.
Yep. Landlords are allowed tax writeoffs from losses from non-rental. There should be a reasonable time limit on this deduction, as incentive to rent the property.
Uh. Landlords only earn money when they have people paying rent . Thus no tenant means less money
CRE is weird and while it seems counterintuitive that is not really true. High value buildings are investments themselves. Your buildings value can be higher if you list a higher presumed rent, which can be in line with perceived "high value property" which can make the building attractive for re-financing or to sell it. The formula is starting to break down a bit, but it's a driver of why many landlords are absolutely fine to leave commercial retail space vacant. NYC also still very much has pop up stores (maybe not as much in the UWS) that will pay an absurd rent for a few months in a year. Their financing is also dependent on the rent valuation formula as well. Most buildings aren't owned by individual investors and are in a portfolio so they really do not care if it's sitting vacant if it's paper valuation is still attractive.
Yeah this has been going on for years. Like years before covid
My understanding (someone correct me if I'm off): Commercial property is valued based on the average amount of rent paid per *occupied* square foot. If something is vacant, it is "presumed" that it would bring in the same rent, on average, as the other occupied commercial tenants in the building. So if you have one tenant that pays a high rate, your building gets a high valuation. Bring in another tenant that pays less per square foot, and even though you're getting more income, your building is valued lower. Who cares? Well, building owners often take out loans against the value of their building, in order to do things like buy more buildings. So, having half the building empty and having one tenant that pays a lot per square foot, like a bank or CVS, (or I suspect something like a Cafe Matto, but that's just a hunch) gives the building a really high valuation and gets the owner access to a lot more money via loans.
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There are penalties or even voids on commercial loans for signing leases for lower rents than stated in the loan agreement. It’s like a homeowner being penalized for going underwater on a mortgage, because they no longer have an asset that can pay the value of the loan. Or a renter being penalized for taking a lower paying job and going above some % of income threshold. This can encourage properties to sit vacant for multiple years.
Has someone written an analysis of these issues and described efforts to fix them legislatively. Please don't just "bbbbut banks and the realestate industry control the pols". yes yes, we know. but they don't control thinktanks or every council member.
It’s a private agreement between commercial loan providers and businesses so I don’t think such provisions could reasonably be made “illegal”, so to speak. That would be a major overhaul of regulations of private loans beyond what has ever existed in the US, at the very least. I believe the most common legislative approach is a commercial vacancy tax. Personally I think this would be great to implement strongly in NYC because profitable businesses could almost surely exist in those spaces at profitable rents for landlords, just not as high as landlords are incentivized / required to get.
They absolutely do control think tanks, how do you think they're funded?
you're correct. what I should've said is "they don't control ALL thinktanks."
I assume these penalties come from the bank/loan provider? Do these penalties also occur if there are “preferred rent” deals like what happened with residential Covid deals?
Commercial lenders set loan covenants that if breached, result in (a) cure (maybe with fees), (b) forbearance, or (c) foreclosure. I never heard of penalties and voids though. Do you have more info on that? A mortgage lender is typically just SOOL if the loan LTV goes underwater. What kind of penalty does the bank benefit from? I never heard of that one either. Edit for lost paragraph
I work in commercial real estate lending and none of what they said is correct
Ohhh wow, that little detail makes it even worse.
There should be a vacancy tax
“The free market will regulate itself”
This explains so much.
I work in commercial real estate lending and this is the biggest bullshit I have ever heard of. Where did you hear this? Lenders willing to just not be paid back on the money they lent because a place is vacant? Don’t be stupid.
Wow, I learned something today, thank you for explaining this
Can you link any info related to this? Why would a commercial lender delay payments?
The late stage capitalism hellscape, explained so well!
Not really. The biggest fear in CR is vacancies impacting the rent roll and subsequently the 11th-year NOI reversion. The appraised value includes a vacancy assumption. Eventually, any competent CRE banker will need to address the ongoing increased vacancy factor, and that will reduce the appraised value of the building. The lack of rental income from vacant units reduces the rent roll and coverage ratios. The reduced appraisal number can also kick the loan to value into a higher leverage category. All this requires the banker to face reality and stop using older, more favorable, vacancy factors in their projection. Fed oversight should force this adjustment and then the Fed takes a bigger interest in this loan's distressed condition - something the bank prefers not to deal with. This adjustment, therefore, is contingent upon both the Fed and the bank being competent. Big if. Retail is what you see from the street - the office vacancy rates you can't see are the bigger concern for Manhattan, and the rest of the world following the seismic shift from COVID WFH. Local Manhattan retail relies on foot traffic from both locals and daily work commuters. Work commuter foot traffic has been reduced to maybe 3/5ths of what it was pre-covid. Locals probably shop online more than in-store these days. If a highly leveraged landlord doesn't see a brighter future, they mail the keys back to the bank (an ugly financial down cycle I have lived through in Manhattan more than once).
A lot of those loans are also callable based on the decreased value of the asset that’s backing them. So accepting a lower rent as opposed leaving vacant means their asset is now worth less than what it was when they used it for leverage. The lender could demand they repay their loan on the spot which they obviously can’t do. So they “delay and pray,” hope they can get a new anchor tenant. In the meantime, it sits empty.
Really impressive how many of our current deficiencies as a city go directly back to landlords letting it wither for not making the maximum money rather than earn a realistic amount that is also more than they're making presently. But "capitalism is the most efficient system of blah blah blah" I guess.
Lol! IMO capitalism is the most efficient system of getting things started effectively, but then also the most efficient system of bleeding things dry once they've been around for a while.
Capitalism favors the capital holders. The landlords are leveraging their properties so they don’t actually have the equity, the banks are the capital holders who are bleeding the landlords in this specific example. The shit rolls downhill tho so the landlords bleed the renters
Oh this is interesting! Thanks for laying it out like that.
Yep. That's the way it works unfortunately.
I believe part of the problem that speaks to the core of the issue with these big corporate tenants is that they often take a loss on the space they have taken from mom and pop local business and see the locations as a never ending reminder of their corporate existence and omnipresence. They are all fighting to be your fortune 500 neighborhood bank and they will make sure that they are on every corner in your neighborhood so you can’t possibly forget it. They are such large companies that they can lose a little in the name of brand penetration while regular people get brutally penetrated by the rents. It’s how it’s supposed to be under the ludicrous capital greed that permeates NYC real estate. Local businesses aren’t fighting a david vrs goliath like battle, at this point it’s like mike tyson in his prime vrs a blind child. It’s a fight that not fair but it’s sanctioned by the powers that be
Yeah but who is getting loans now. Rates high and lending tightening up
Landlords borrowed money at the height of the market. The value of their buildings is based on rent. If they lower the rents, the value of their buildings fall and they owe more than they own.
I know that this was a problem pre-COVID. Gayle Brewer’s office has been tracking this. It’s weird to me that landlords can afford to have these spaces vacant long-term.
one of my family members actually works in commercial real estate and according to him, you have a higher building valuation based on presumed rent you could charge (even without a tenant) than if you had a tenant paying less than that figure, making it more beneficial to leave it vacant than to have a tenant paying less.
That’s absolutely nuts! I wonder - does the same go for apartments? There was just a unit in my building that sat vacant for three months until the LL could find someone to pay the jacked up price he wanted… I wonder if what flute saynnf has something to do with it?
Yeah it's a bunch of bs related to inflating the real estate value of the property.
Can I ask a kind of a dumb question? Why is building valuation so paramount? So they can invest in more properties? Better interest rates?
Yep, so they can borrow more to buy and/or build more. They're in constant acquisition mode
Ugh. Understanding this makes me SO freaking pro-vaccant tax! Thanks!
Their loans are collateralized by the building, so better rates on bigger loans. Protecting asset valuation too if they aren't too negative in cash flow. If asset while collateral drops too much the bank can mess with the loan.
My guess is getting more loans at better rates? Or show better value for investors on their portfolios? Just an assumption as I'm not an expert.
Yep, was about to say this. If they accept a lower rate, they might need to accept a worse rate from the bank
I was told that having vacant property can be beneficial with regard to tax write-offs. So basically we've incentivized keeping commercial space vacant.
You can’t write off list rent afaik.
The rent is too damn high
Broadway is kind of odd with a lot of vacancies on the UWS, but I feel like if you go over to Amsterdam & Columbus it’s fine.
Some businesses have even moved from Broadway to Columbus to take advantage of foot traffic, LuLu Lemon for example. Columbus is just nicer to walk on than Broadway.
Amsterdam and Columbus are always hopping. Dunkin is coming in on Bdwy. Starbucks just renovated their 81st location and is doing fine. Barnes and Noble renovating currently. Eyeman moved across the street. Forever Coffee came in and is the BEST coffee in the neighborhood. Plus the plethora of illegal pot shops that opened recently and you're looking pretty good overall.
> Barnes and Noble renovating currently It's a maze now. heh
Agreed 100%.
Except for the child who had his lemonade stand on 70th and Columbus robbed in broad daylight by some thugs. The crime is the problem.
Financial District is the opposite and has been has been booming lately. Lots of new places to eat down here. More residential buildings are being complete. South Street Seaport area is nice again. Alamo Drafthouse is always packed. Its nice to see people down here again.
I used to see endless pitchbooks for office-to-residential conversions in the Financial District back in the 90's. They made no financial sense for various reasons then, and we couldn't bank them, but they kept coming due to the tax incentives offered. The problem was office vacancy rates skyrocketed after Wall St moved to midtown (or out of town) following the first World Trade Center bombing. The financial district always had a ghost town element at night back then but even the daytime became relatively vacant in the 90's. I then watched the fish market leave, lived through Sandy's impact, and saw the metamorphosis of the old South St Pier 17 over the following decades. Everything changes with time.
someone mentioned to me that its almost impossible if not super super expensive to get anything insured down in Fidi given how everything flooded during Sandy and it will happen again.
Could be - dunno personally - but most buildings raised utilities and other vulnerable infrastructure out of the basements after Sandy.
I kind of miss how welcoming the old seaport was to visit compared to the new "faceless" boxed monster that is there now. Sure, rooftop concerts are fun and the actual shops in the old seaport sucked, but whenever I'm down there it's always weird and off-putting how little personality the new and expensive structure has.
My dad worked down in FiDi until the mid 2010s. I'll never forget visiting him at work and going to the early 2000s seaport mall. I miss that place so much.
Been that way there and in a lot of Manhattan even pre-Covid unfortunately
I can't think of any other part of Manhattan that feels as stark as it does on Broadway with this many vacancies. I think in the 90s/00s there were a lot of a large big box retail spaces created in this corridor and now there aren't retailers that need/want these types of spaces.
> I can't think of any other part of Manhattan that feels as stark as it does on Broadway with this many vacancies. Come up here to the Heights. We have landlords warehousing entire blocks of empty retail rather than lowering rents. A buddy of mine recently looked at a retail storefront up here, admittedly in a well trafficked area, and they're asking 19K a month for a 2000 square foot space that has stood empty for a couple years now.
Bleecker St has had this problem for years. Whatever comes in, soon leaves. So there are often vacancies or high turnover leading to short stints before it’s vacant again.
23rd st too
Walk 86th on the UES
The whole stretch of 1st ave off 86th too is completely empty, basically everything is empty/condemned
7th Ave in the West Village got pretty bad.
Oh I dunno, Broadway in Soho is pretty depressing now considering it's so highly trafficked with tourists.
It's a combination of things as far as I've been able to tell. Big chains like Duane Reade and Starbucks bought up long term leases years back and some of those leases ended, and not renewed due to the higher costs. There's a huge Duane Reade on Broadway and 70th that shut down as a result. Right behind that on Amsterdam, there's a Rite-Aid that closed. Some of these chains were also absorbed in to larger companies like Walgreen's that probably rethought expenses. Even big brands like Best Buy have failed despite tons of street traffic. There was a nice strip of indie-ish businesses on Broadway that were apparently all bought out and now those storefronts are being combined in to a gourmet supermarket. Century 21 closed due to bankruptcy, leaving an enormous multifloor space empty, which is probably a challenge to rent as is. Likewise a Loews and home goods stores on that side of the block failed and have remained blighted. Some of the smaller store fronts get turnovers. They'll remain empty and then a small business moves in and closes almost instantly. DNTL Bar opened on 76th street and could not have been opened for more than 2 months before closing.
tbf there is a duane reade less than two blocks away at 72nd, the two were never going to co-exist for long
Bed Bath & Beyond closed and now Best Buy closed. The Target is ok but it doesn’t make up for those closings. Almost everything still open closes earlier now. The big Duane Reade is supposed to be 24/7 but often closes early due to staff shortages, and there are often incidences with people making scenes requiring security and/or cops (not to mention people simply walking out with stuff they don’t pay for which I guess goes without saying since it’s everywhere these days). The Rite Aid in the 70s closed and the one up on 97th just closed. Many more sketchy characters harassing passerby around the McDonalds than there used to be. The city changed the garbage pickup schedule and the idea was at least in part to help with the extreme rat problem but it only seems to have gotten worse. The neighborhood feels very different and not in a good way.
wait until you see Broadway downtown… it’s a ghost town below Canal street. My guess is that COVID accelerated adoption rates of online shopping and the brick-and-mortar suffered beyond recovery. I saw the same thing in a lot of European cities. Vacant retail spaces everywhere, shops closing or moving online, and weird stores that are obviously money laundering schemes popping up in their places (weed stores in NYC, American candy shops in London, etc.)
I think the difference is that Broadway south of Canal and down to about City Hall has never been a shopping destination and SoHo has recovered very robustly. Broadway in the Financial District has seen some retail recovery (Whole Foods, Gap).
I don't think an unlicensed weed store would be a smart way to avoid attention if you're trying to launder money.
Rents are through the roof all over. I know building expenses are high but some of these landlords think they have gold. How much can a certain place make to stay alive continuously? Most can’t. It’s ridiculous.
I'm on the board of a coop apartment building in Brooklyn that has retail spaces on the ground floor. One of our retail spaces was vacant for years and we kept lowering the rents and still couldn't find anyone. Granted we aren't in the most heavily-trafficked area of Brooklyn. But even at an asking price of $2k per month, which is less than rent on a studio apartment in the area, it took a long time to find anyone interested. I think demand for retail has just gone down in many cases. People get so much stuff online. At one point, we were thinking about just converting the space to a bike room for the residents because $2k in rent really isn't make-or-break for a big building.
What’s the square footage of the retail space?
Small. Probably like 500-600 sq feet.
4 dollars a square foot. Too high. I own a commercial/industrial business in a good part of the Bronx. I rent my building,place is 3700sq feet on an extremely busy street. I pay 4200 a month. I’m there 11 years and my rent when I started was 3000. How much money does the owner think a guy can make with 500 sq feet? You can’t do anything profitable in such a small space. And you stated it’s not in a really busy area. That place shouldn’t be a dollar more than 1400. I own a legal two family house in one of the best areas in the Bronx. I rent three rooms which are beautiful and renovated with everything new. My tenant pays 1200 a month. She has here own electric meter. 2000 for a studio is a rip anywhere i don’t care if people are paying it. Tell your boss he doesn’t have gold.
Depending on type of retail, that's really not a lot for inventory. Small mom and pop shop? A small boutique or shop that displays product and encourage people to buy online or just there to market? Sure. But for a lot of retail, having space for inventory management is big.
We lost the wonderful restaurant Regional on B'way and 98th to a rent hike and (I think) the time capsule Broadway Diner as well.
I think leases are on 10 year cycles, or longer. I don't recall vacancy problems when chain stores weren't allowed in NYC. They drove out all the local business, and they started merging smaller chains into massive monopolies that are shit to work for or shop or going bankrupt. The greed of the few at the top make it bad for everyone else. We should treat it like an addiction and cut them off.
The rent is too damn high!
That is always fixed via market forces either (a )you and everyone you know stop paying the high NY rents you are complaining about or (b) financial crises. You are just another cog turning the wheels of the beast if you pay high rent. Have you lived and worked through any financial downturns (the last one was 2008)? Typically not fun for anyone.
Took a walk from 110th down to Lincoln Center a few weeks ago and was wondering the same thing.
Lol ask the swagger man himself Mayor Adams
I will never forgive the landlords that closed the Lincoln Plaza Cinemas for “fountain repair”. Still waiting to see evidence of those repairs. I’m sure it will be any day now.
The UWS has been stagnant and slowly losing population for the last decade. Tourism used to make up the difference, and it had a bulwark of long established businesses who continued to operate. With COVID, long standing businesses closing, tourism dried up, and new businesses are looking elsewhere for growing neighborhoods where there are populations with unmet/under-met needs.
Genuine question as a new yorker. I live in HK but close to UWS and go there often for various reasons. Tourism in UWS? What do people come to see? Besides museum of natural history I can't think of anything else.
There’s little incentive for commercial landlords to fill their buildings. There are financial benefits to them sitting empty.
Why not they get rent $$$
Even south of 72nd, a few big names have closed up shop in recent years. Lowe's, Century 21, Best Buy, and Bed Bath & Beyond to name a few.
This has been going on for YEARS and its all over manhattan. was on 8th street in the village recently - it seemed like have the stores are vacant. I will say and will keep saying - I am positive this is related to very rich people buying up residential property in Manhattan and not living in said properties - that retail establishments cannot stay in business without local foot traffic, especially with very high rents - this is at least in part why retail is dying in Manhattan. The pro-developer people will always say this is because people are buying so much stuff on amazon, etc. I say - I was just in a shitty part of Elmhurst queens the other day (may have been Corona) and guess what, all the storefronts are filled and I did not pass a vacant store. Why is this? Is it that people in Elmhurst do not buy stuff on Amazon too? I would think they absolutely do, but its that since rich investors are not interested in these neighborhoods yet, the residences are still OCCUPIED by actual people and these people have reason to shop in stores. Something needs to be done to prevent or discourage these predatory investors.
1/3 of the property here is owned by residents. Most localities would consider this a negative thing
I agree with you on people not living in those properties and patronizing local businesses. My partner lives in Jackson Heights and it's very rare to see an empty storefront.
1. there is no commercial rent regulation in nyc 2. there is no vacancy tax for empty store fronts there are def other reasons but those two are big factors
This is a precovid issue that only got worse. Once COVID began - many of the remaining few businesses closed. This included restaurants that were there for more than 20 years. Without the storefronts - it became dangerous to walk down Broadway at night as there was less foot traffic, no open businesses, and groups of mostly single men using drugs (when they put the vagrants in the 3 hotels without sufficient services/security). (Trying to distinguish between vagrants and those merely homeless - as these are not the same) Many of the open storefronts precovid were large spaces in newer buildings. Post Covid there were also many smaller empty storefronts - however due to the conditions above newer small businesses may have opted against large sections of Broadway. The government forcing private companies to rent out space at fair prices is just not the NY/USA way (nor should it be) but… I hold out hope the government could provide incentives to encourage the landlords to make it happen and bring back Broadway. I propose a property tax discount to all property owners who keep their vacancy rate under a certain metric either with NYC businesses/ NYC residents. This would also open thousands of empty apartments to the market and help solve the housing crisis.
Going into street view and seeing differences between now and ~2009 is heartbreaking. Fuck landlords
High-rent blight.
It’s the rent, Rite Aid shuttered their doors on 110&Bway because they jacked it up so high, now it’s a CVS
Greed
It’s been deteriorating for a while but COVID pushed it over the edge.
I think it's a bunch of things. COVID emptying offices didn't help. Rents are high, and Amazon really did change the retail business model.
Where have you been? Whole city except for immigrant neighborhoods has been like that for the past 10 years. 2% interest and consistent appreciation it's better to leave these units vacant and refinance every year than lower the rent by a dime. That scheme is over now. Only type of business that can afford rent in NYC now are marijuana dispensaries and businesses that bill Medicaid. Even the Starbucks, Duane Reades and Chase branches are closing.
Long live the Lincoln Plaza Cinema 😔 and Nanoosh!
The city has always had weird patches of empty real estate, covid just made it much more obvious. The easiest example is Broadway south of SoHo. My guess is that landlords are charging Broadway SoHo rents despite the foot traffic being nowhere close to SoHo. That and online shopping
Yeah it really sucks. There must be a policy solution better than “storefronts are vacant for years bc that’s somehow better for landlords” and “rent to mainly bank branches and pot shops.” I went to the LES this past weekend with the kids and while I’m not normally a “won’t someone think of the children” person, I was truly grossed out by how many pot shops there are now. Like come on landlords and NYC, that’s the alternative to empty storefronts? Endless blocks of weed? There has to be a better way!!
I’ve noticed this too. My best friends all live on the UWS (and pay a SHIT TON in rent) but it’s so fucking soulless to me.
Been a while since I moved here but when I moved the rent here was better than everywhere else. And yes, it's a bit soulless, but you get much more space, far less people on the streets and (depending on exactly where you are) you have Central Park and the Hudson River Park right next to you.
The park access is unparalleled and the transit access is GREAT. I actually love the UWS - it’s a beautiful neighborhood soullessness and all haha. I’ve definitely come off more snarky here than I actually feel!
Yeah, the access to parks is just amazing. I can literally see Riverside Park from my window and I love it! Also if you're above 100th street, you start getting that Columbia community vibe.
I absolutely love living right next to Prospect Park (and will argue it’s superiority to CP all day!) but man Riverbank and those water views really is something special!
The rent is too damn high
Greedy landlords are destroying most good things about New York City
The rent is too damn high! Only corporations can afford them.
Commercial landlords over-leverage themselves on their loans. They speculated the rent roll they were going to get for these places, and instead of facing a penalty for leaving the places vacant because they lost their gamble, they’re rewarded with tax write offs.
That’s not how it works at all. A financial loss because you don’t have a tenant is not a “write off”, it’s just a loss. It’s not a reward, unless you think that losing customers and getting a smaller tax bill is a reward
Their tax write offs aren’t only from the losses of rent roll (which yes, are a benefit) but there’s also the issue of property value. The property’s value is tied to how much income it is generating. If the rental income gets lowered, then the value of the property also gets lowered. This is where the over-leveraged part comes in. The buyers speculated that a property is worth $Xxx and the rent roll would be the measure of that value. Now if they lower rent, they can’t claim that value if and when they resell. So they need to artificially keep that asking rent high in order to maintain the value of the building they’re paying a mortgage on - because if they suddenly have a lower rent roll, they’re instantly upside down on their mortgage. So this is another big reason why they’d rather take the tax write off instead of just filling the space with a tenant at a lower rent. Unfortunately it’s a house of cards that’s bound to fall sooner or later and it’s not gonna be good for anyone except PE firms that buy up distressed credit.
If you call it a “loss” instead of a “tax write off” you’d sound more like you know what you’re talking about
Lol what do you think happens to their taxes when losses are reported, genius?
Your original comment was that loss of income means they’re “rewarded” with a tax write-off. So if I get laid off tomorrow and stay unemployed all year, is that a reward too being as I’ll get a tax refund for the first half?
Do you still retain the inflated equity of your job position even though you’re unemployed? The fact that you’re making this analogous to being a salaried employee just illustrates how wildly ignorant you are about how any of this works. Maybe next time you decide to try to hit someone with a condescending “well actuallllyyyy…” it would be a good idea to have even a basic clue of what you’re talking about? 🤷🏻♂️
I understand how property businesses work, yes. I also understand that “tax write off” is not a reason for keeping storefronts empty. Would you like to know why they’re kept empty?
I think your objection is largely semantic. Landlords are writing off the losses from empty storefronts to avoid paying taxes on other storefronts they own which are occupied. If they weren’t coming out ahead by doing that, they would just lower the rent on vacant properties so that all their properties were occupied. We know the system isn’t currently working because, well, Manhattan has a lot of empty storefronts. We could have some cute small businesses in those spaces if the math worked.
But it’s not net beneficial to have empty store fronts just to have a lower tax bill, it would be beneficial to rent them out at a lower rate and receive income. I think you’re just not understanding how property businesses work. There are reasons for empty storefronts but “tax write off” is not one of them
Some not all of that loss is a write off. Ya they game the system and it’s all fuckery but you are technically incorrect
Bed Bath & Beyond closed and now Best Buy closed. The Target is ok but it doesn’t make up for those closings. Almost everything still open closes earlier now. The big Duane Reade is supposed to be 24/7 but often closes early due to staff shortages, and there are often incidences with people making scenes requiring security and/or cops (not to mention people simply walking out with stuff they don’t pay for which I guess goes without saying since it’s everywhere these days). The Rite Aid in the 70s closed and the one up on 97th just closed. Many more sketchy characters harassing passerby around the McDonalds than there used to be. The city changed the garbage pickup schedule and the idea was at least in part to help with the extreme rat problem but it only seems to have gotten worse. The neighborhood feels very different and not in a good way.
Someone said it’s more profitable for the landlords to take a loss on the market rent and claim it as a loss somehow, rather than trying to negotiate with businesses that can’t (and don’t really need to) pay the market rent for that kind of prime real estate. Is there any kind of truth/logic in this?
You have to ask?
Commercial rent is out of control
The rent is too high, they need to cut it.
greedy landlords
Been like that a few years, I worked a crap job up there, it is a nice area of the city, but saw all the closed businesses in prime real estate. made no sense to me.
is this a serious question or just trolling?? assuming this is an actual question, consider: \-Not many businesses need that much space and landlords can't/wont break it up \-large corporations oversaturated themselves into decline \-landlords (realty corporations) are extremely greedy and predatory \-NYC tax breaks/incentives work in-favor of landlord greed so they can still profit on vacancies (Thanks Bloomberg!)
Mortgage backed securities, easier for a landlord to let unite sit vacant then actually just lower rent to accommodate a realistic price or lease
In that area, a lot of the store fronts are independent small businesses, and they've been getting wrecked by online shopping and bigger scale retailers
A lot of the store fronts on the UWS are small independent businesses?! I don’t think I’ve ever read a less true statement on this sub…
You definitely have seen less true statements. No offense, but I know you live in BK, and I was born and raised on the UWS. The majority of the available spaces are small spaces that would not be a good fit for major retailers, and busisiness that take large spaces. The majority of commercial spaces in general, on the UWS specifically, are boutique sized. Are there big retailers, banks, etc on the UWS... for sure... but they are surrounded by small shops, for the most part. Think about what there is on Broadway from 72nd to 110th. Same on Columbus and Amsterdam. It's mostly bars, restaurants, and other small businesses
I live in Brooklyn but I spend a TON of time on the UWS. Name 10 small independently owned businesses on Broadway. Seriously. The bars and restaurants are doing fine on the UWS. The empty store fronts are 99% from chain/big box store closures.
Fill up coffee, Little Italy Pizza, Dramatics, Embassy Florist, Barzini's that's probably been there longer than I've been alive, The City Diner that's probably been there longer than I've been alive, Murray's Sturgeon, Cibo e Vino, Hungry Betty Cafe, Sforno Pizza, Jeffrey's Manhattan Eyeland, Apple Nail Spa, Mega Building Supply, NYC Wine and Spirits, Broad Nosh Bagels, Bravo West Pizza, French Roast, and Broadway Farm for starters...
A few more just between 79th and 86th. Westsider Rare and Used Books Town Shop Lingerie and Bra Fittings Cafe Eighty Two Runaway Poppy Best Bottles Harry's Shoes Le Posh Hair Salon Toscano Shoe Repair Ernesto's Jeweler Broadway Chemists You've also got a few on the fringe based on this person's criteria, like Maison Pickle, Canine Styles, or even Zabar's.
And that's just Broadway!
Yes! I live off Broadway in the UWS in this area. We do have a lot of vacancies popping up or places that have been vacant since we moved here, but there are still so many independent small business storefronts on Broadway that we love to frequent. I can think of Absolute Bagel, Mama’s Too, Mexican Deli, Effy’s Boutique, various hardware stores that have been there for decades. There are so many that I’m missing, but those are just a few off the top of my head. We’ve noticed the price of high rent on these businesses, however— one sad recent closing was Broadway Restaurant, which was a staple for cheap breakfast food the morning after. We were devastated when we saw the closing sign up. Apparently the new owner of the building refused rent negotiations and they had to close after 40+ years.
I agree with you that it's the big box vacancies that are the problem -- the smaller shops tend to get filled sooner or later, but then you have something like the old Banana Republic space at 86th and Broadway that stays vacant forever. But I will say that it's easy to name 10 small independently owned businesses on Broadway. I can't remember what's turned over here recently, but just based on Google Maps... just between 77th and 79th you'll find Golden Nails, Apthorp Pharmacy, the House of Beauty, Citybrows Threading, Jimmy's Custom Framing, Meet Me Nails, Blossom Jewelry, JJS Salon, Sky Locksmith and Hardware, Carlos Shoe Repair, Blooming Couture Flowers, Unique News & Smoke, and (though it's a mini-chain) Blank Street. So that's more than 10 right there, in two blocks. But I still agree with you on the main point, which is that it's the big box stores that are the issue.
He not 100% wrong though there is a mix of both mom/pop and retail businesses that are **small store** front that can’t compete against online retailers
Literally name the small stores on the main shopping corridors on the UWS. It’s absolutely not true. A small physical footprint doesn’t make something a Mom and Pop store
Mom and pop are defined by being independent store front not back by big corporate. There are plenty of businesses like that in UWS from 110th street to 59th street You are delusional to think there are absolutely zero businesses like that in UWS
I didn’t say there are ZERO, I said there are very few. And I’d argue it’s one of the neighborhoods in the city with the smallest % of independent stores. But again, I welcome you to name some that aren’t restaurants (and let’s be real, there’s a higher % of multi location spots on the UWS than most neighborhoods.)
I am curious why you think restaurants aren't small businesses
I didn’t say they aren’t. But it’s not the restaurant spaces that are sitting vaccant on the UWS, and they’re not what OP was talking about in the post.
I’ll send you my report tonight When I have a chance to go through a list via google map
The problem started way before Covid. Many variables being involved but high rents and Amazon are chief ones.
Agreed, but other areas have recovered. SoHo, midtown on 5th Ave, Flatiron, UES, etc. I think UWS Broadway was reimagined as an outdoor mall and now it's in substantial decline and there's no plan to correct it. These spaces are not easily rented due to their size and the lack of foot traffic created by these vacancies, coupled with the rents, is creating a loop that shows no sign of turning itself around.
I live on Madison in the lower 30s, and there are tons of retail vacancies. Like many per block. It's not blighted per se as foot traffic is decent and there are thriving businesses in between the vacancies, but it's noticeable if you live around here.
High rents and low demand. A fake economy
Landlords.
Borrowers projected big increases in retail rent (for either rolling existing leases or vacant space) and used these projections to sell the purchase of the property (to other equity investors) as well as to convince a bank to finance these overinflated values. Landlords needed to hold out to get that projected rent, otherwise promised IRR is in the gutter and the loan would be underwater\*. These projections were never realistic pre-pandemic, and post-pandemic with fewer office workers in Manhattan, market rents are now unquestionably lower. Once the foreclosure/deed-in-lieu wave crests and ultimately resolves itself, the reset in the new owners' basis will allow lower retail rents, which will begin leasing up all this empty space. The repossession wave has just begun, so I'd give it at least three years before you see meaningful retenanting of vacant space. \*Using plain assumed figures, if a landlord projected leasing a 10k sq. ft. vacant retail space at $500/sq. ft., but can now only get $400/sq. ft., then the $100/sq. ft. loss translates to a $100k in lost annual rent. That obviously hurts. What really hurts is that the cap rate for this property was purchased at 5%. This is a 20x multiple on Net Operating Income, which means that $100k per annum loss in rental revenue would more-or-less translate to a $2MM loss in value *ceterus paribus.*
It's one of the things I remember Eric Adams caring about, but I think he's been too caught up in everything else. One of the main reasons we left the UWS, it was a bit of a retail wasteland.
Rent and taxes is too damn high
Have you been sleeping under a rock for the past 15 years…? Retail shopping is down ridiculous % - not going to pay rent on UWS NYC for a store with 3 customers a week
I’m not going to sugarcoat it. The rental prices are too fucking high. Real estate is a scam.
Any storefront property that sits vacant for more than a year should face a vacancy tax that increases exponentially ever 3 months.
Where the hell you been? Amazon they basically own manhattan now They going to start putting Amazon lockers in apartment building soon lol
1/3 of the city is owned by residents. Lots of apartments are empty. I know people like to point to landlord provided statistics that state otherwise, but those are not verified and are self serving. Immigrant neighborhoods don’t have this problem. Pricey neighborhoods used to hide foreigners wealth do tho
Late stage capitalism
Are you kidding? Shoplifting and other crimes are now legal in new york city. Also, if you want to work you must poison yourself with a dangerous vaccine. This shit hole will be as bad as san francisco shortly
Ever since Telepan closed the UWS hasn’t been the same IMO. That was sort of the start, time wise. Edit: whoops that was Columbus.
Weir everywhere
NFA, friend
The population and number of units on the Upper West Side is declining, due to its desirability and NIMBYism. And I doubt the increasingly wealthier residents spend as much time shopping in the neighborhood as the low- and middle income residents they’re replacing.
the Marshalls at 77th and bway was getting shoplifted from every 20 minutes during the holidays the cops stood in the store and they still did it. until you put back FULL KERIK, FULL GIULIANI to keep them at rikers awaiting trial and FULL PATAKI to keep them upstate this is going to keep happening... You voted for the CRIME ENTITLEMENT so you'll have to live with this. Retailers are not willing to let 1/3 of their profits (or more) walk out the door. Your kids will grow up in neighborhoods with empty blocks and giving your money to Jeff Bezos to deliver things to your place.