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New York's small businesses seek a reprieve to combat retail blight

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A small adjustment on commercial rent tax would lift a big burden from business owners

Even In Affluent Manhattan, Recession Takes Toll On Businesses Photo by Spencer Platt/Getty Images

The Upper East Side’s Third and Madison avenues, Greenwich Village’s Bleecker Street, and Boerum Hill’s Smith Street all have one major thing in common: they’re hemorrhaging the shops and small businesses that once made them vibrant destinations.

On the Upper East Side, retail vacancies along Third and Madison avenues are climbing more quickly than anywhere else in the city, finds commercial real estate firm Cushman & Wakefield. Meanwhile, Bleecker and Smith streets are suffering from something Brooklyn Magazine calls “over-gentrification,” as inflating rents remain unsustainable to most retailers, including high-end purveyors whose sales fail to justify the monthly bloodletting that is paying rent.

The city has even gotten to a point, the New York Times writes, where it’s now lamenting the loss of institutions that might have been met with chagrin when they first opened.

The example Ginia Bellafante uses in the Times is of French Roast, the corporate-owned Left Bank-style restaurant on the corner of West 11th Street and Sixth Avenue that shuttered overnight in late July: “We are at the point now that we mourn the loss of even those places, which years ago may have spurred debates about inauthenticity and fears of dull professional-class invasion.”

The problem with New York’s retail vacancies is multifaceted, but undergirded by greed. A report released by State Senator Brad Hoylman called “Bleaker on Bleecker” illustrates why small businesses are faltering: “Instead of renting to another independent business for a similar rent as the previous tenant, landlords will hold out for a tenant—often a large corporate chain—that is able to pay exponentially more than the previous tenant.”

So what’s the city to do? The Times suggests a small reprieve on behalf of the city by restructuring a commercial rent tax on businesses whose rent surpasses $250,000 a year. Under the tax, businesses in Manhattan under 96th Street with rents exceeding $250,000/year must give the city 3.9 percent of what they pay in rent. The tax is often levied in addition to other real estate taxes.

Small business owners and elected officials have backed a plan to raise that threshold to $500,000, from $250,000, but it’s failed to stick with Mayor de Blasio, who the Times notes did not include the measure in his most recent budget. Upping the threshold would cost the city about $55 million.

Sustaining a wide cross-section of small businesses is essential to maintaining the varied, vibrant, and sometimes weird New York City that people like Vanishing New York blogger Jeremiah Moss fell in love with. “I feel alienated in my own neighborhood,” Moss, an East Village resident for a decade, told the New Yorker. “It’s like a frat house.”