CITIES / DISAPPEARING SHOPS : Rents Turning Mom-and-Pop Into Orphans : As small retailers are forced out, the areas they leave often suffer from the lack of services.
For more than a quarter of a century, Herman Leffler has sold cotton and nylon blend fabrics a stone’s throw from Macy’s huge department store on Herald Square in Manhattan, shipping his wares from tiny Show Boat Fabrics to textile manufacturers throughout the nation.
Then, the store’s landlord arrived with a bombshell. To renew his lease, Leffler would have to pay four times the old rent. Now, Leffler, 70, is not sure what he’s going to do when his lease expires next year.
His experience is not unique. Thousands of store owners in New York City over the last decade have been forced to move or close their businesses because of skyrocketing rents. The mom-and-pop business, so central to the popular image of New York, is clearly in peril. And, as the nation’s leading indicator of the urban condition, New York may tell a larger story about changing storefronts.
THE ISSUE: “I don’t cry for the mom-and-pops because there’s nothing in (their going out of business) that has not been going on in Manhattan for 500 years,” said Steven Fredericks, a broker specializing in commercial real estate at the firm of Cushman & Wakefield. If the city always tried to preserve things the way they were, “stores would still be selling bear claws and lamp oil,” he said.
Steve Spinola, president of the Real Estate Board of New York, agreed, arguing that, although small businesses with 10-year leases coming due may be feeling the squeeze today, they also benefited back in the early ‘80s, when inflation was rampant.
“They’re complaining that their rents are going up 500%, but their products might have gone up 500% or more over that same period,” he said.
But Sung Soo Kim, the president of the Korean-American Small Business Service Center of New York, charged that landlords are driving many greengrocers out of business just when the shopkeepers are beginning to see profits.
The grocers help to revitalize some depressed neighborhoods, but then landlords raise rents to unaffordable levels, he said.
Sergio Camilo, co-owner of Manhattan’s Sugar Deli and Supermarket, said he now pays $9,000 a month in rent.
“I work 16 hours a day, seven days a week, for the bank and the landlord,” he said. “It’s crazy.”
THE IMPACT: Dawn Sullivan, head of Manhattan’s East Side Tenants’ Coalition, contends that dry cleaners, pharmacies, grocers and other badly needed services give way to high-priced boutiques when rents rise.
Even those stores often don’t last long, she said. Then vacant stores sometimes become not only eyesores but attract drug dealers and unlicensed sidewalk peddlers.
In 1986, a study group appointed by former Mayor Edward I. Koch issued a report based on a survey of more than 1,000 small businesses in New York. The Small Retail Business Study Commission concluded that the problem of rent increases was not serious enough to warrant regulation. When it issued its report, the 15-person study commission split into two factions, mirroring the disagreements between tenants and landlords.
THE OUTLOOK: The Real Estate Board’s Spinola said he has proposed tax credits for certain kinds of retail space and special zoning designed to protect the kinds of services--grocers, pharmacists and other small shops--a community needs. But he draws the line at commercial rent control.
New York City’s weak economy may kill off more small businesses before the softness in commercial rentals can bring rents down.
In a recent survey of 165 store owners along Manhattan’s hard-hit Upper West Side, 90% of the shopkeepers said they would move or go out of business unless there was some rent relief.
The survey by Democratic City Councilwoman Ronnie Eldridge of Manhattan showed also that 70% of the store owners claimed rent to be their biggest problem, a sharp rise from 48% in the 1986 Koch commission report, despite the less heated market.
