In high-priced Man­hat­tan, more and more empty stores

Kuwait Times - - Business -

NEW YORK: The New York bor­ough of Man­hat­tan is richer and more pop­u­lated than ever, but a grow­ing num­ber of busi­nesses are clos­ing their doors un­der the pres­sure of ex­or­bi­tant rents and on­line com­merce. Yes­ter­day-which hap­pens to be Valen­tine’s Day-Steven Telvi will close down his Up­per East Side drug­store, The Source, after nearly 37 years.

It fell vic­tim to slower busi­ness and high rent, he says. “The whole is­land is go­ing down the tube,” Telvi says of small busi­ness in Man­hat­tan. From Soho to the Up­per West Side, pass­ing Fifth Av­enue or the Meat­pack­ing Dis­trict, it is no longer rare to see two or three de­serted store­fronts on the same block, right in the mid­dle of the Big Ap­ple, a shop­per’s par­adise. Nearly all the eco­nomic in­di­ca­tors of Amer­ica’s largest city look pos­i­tive: his­tor­i­cally low un­em­ploy­ment; per capita in­come 34 per­cent above the na­tional av­er­age; more than 61 mil­lion tourists last year.

Busi­ness peo­ple and prop­erty agents in­ter­viewed by AFP all cite sky­rock­et­ing rents as the pri­mary cause of the busi­ness clo­sures. Rents rose 68 per­cent be­tween 2009 and 2016 in Soho, 70 per­cent in parts of the Up­per West Side, and 175 per­cent in places on Fifth Av­enue, ac­cord­ing to the Real Es­tate Board of New York (REBNY).

Mar­ket fun­da­men­tals

“This is a clas­sic ex­am­ple of pric­ing out­strip­ping de­mand and fun­da­men­tals in a mar­ket,” said Brian Kli­mas, REBNY’s vice pres­i­dent in charge of re­search. Prices have fi­nally started to fall over the past few months in nu­mer­ous parts of Man­hat­tan. But the pro­por­tion of va­cant busi­nesses is still ris­ing, to nearly a quar­ter of spa­ces in Soho at the end of 2017, ac­cord­ing to prop­erty firm Cush­man & Wake­field. “Land­lords have been slow to change the price point of their re­tail of­fer­ing,” said Ken­neth Hochhauser, ex­ec­u­tive vice pres­i­dent of Winick Re­alty Group.

For the shop­keep­ers who re­main, some­times in ten­u­ous fi­nan­cial cir­cum­stances, “it’s not help­ing” to see neigh­bors dis­ap­pear, says Clara, a sales­per­son at ready-to-wear clothes re­tailer Vari­a­zoni on the Up­per West Side. “Busi­ness is not very good. There’s no (foot) traf­fic” be­cause there aren’t enough busi­nesses, said Jennifer Sun, who opened the Mag­i­cal Kids store for chil­dren’s cloth­ing on the Up­per East Side in May 2016. After an “OK” first year, Sun says many sur­round­ing stores have closed “over the last five or six months”and ac­tiv­ity slowed.

“I don’t even have a salary,” she said. On­line com­merce

Steven Sou­tendijk, ex­ec­u­tive di­rec­tor of re­tail sales at Cush­man & Wake­field, said, “it’s go­ing to take some time” be­fore the mar­ket ad­justs. He talks of “two or three years be­fore it re­ally swings back,” but isn’t wor­ried. “In the fi­nan­cial cri­sis, you had all ac­tiv­ity dry up en­tirely for a pe­riod of four or five months,” he said, re­fer­ring to the global eco­nomic col­lapse that struck in 2008 and peaked the fol­low­ing year.

“It does not feel as neg­a­tive as 2009. Not even close.” But at that time, on­line com­merce rep­re­sented only 3.6 per­cent of re­tail sales, against 9.1 per­cent to­day, ac­cord­ing to the lat­est gov­ern­ment fig­ures. Telvi re­mem­bers it per­fectly. That was when he changed lo­ca­tions-from one side of Third Av­enue to the other.

“That’s when the in­ter­net kicked in” for com­merce, he said. Since then, his ac­tiv­ity has dropped five per­cent an­nu­ally. The open­ing of new sub­way sta­tions on Sec­ond Av­enue at the end of 2016 re­duced the foot traf­fic past his store a lit­tle more, cut­ting by a quar­ter his turnover and push­ing him to­wards the exit.

Some New York City Coun­cil mem­bers say au­thor­i­ties have to act. In a re­port re­leased in mid-De­cem­ber, they warn that other­wise, the eco­nomic down­turn could “un­der­mine the neigh­bor­hood char­ac­ter and pro­vi­sion of goods and ser­vices that are es­sen­tial to liv­abil­ity.”

At the end of Novem­ber, Mayor Bill de Bla­sio made an ini­tial move, dou­bling the thresh­old for which re­tail­ers are ex­empt from mu­nic­i­pal tax. The shop­keep­ers are fight­ing with their own weapons.

“I do spe­cial things that no­body has,” says Sun, point­ing to an em­broi­dered pil­low. “We al­ways strug­gle to stay rel­e­vant to our cus­tomers and what they need,” says Matt Sartwell, of Kitchen Arts & Let­ters, which spe­cial­izes in books about gas­tron­omy, on the Up­per East Side. —

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