The persistent myth that New York is experiencing a retail
vacancy “crisis” has once again captured the attention of some elected
officials who are once again floating a new commercial rent control plan. The
latest proposal was met with swift opposition from business leaders and
homeowners throughout the city – and for good reason.
The Brooklyn, Queens and Manhattan Chambers of Commerce,
business improvement districts, along with advocates representing cooperative
and condominium homeowners believe strongly that commercial rent control would
have adverse effects on New York City, with severe unintended
consequences.
The proposed commercial rent control bill (Intro 1796) would
establish a Commercial Rent Guidelines board, to be overseen by the Mayor, that
would determine annual lease increases on small-scale retail, professional
service and manufacturing storefront spaces.
However, two recent reports found there is no city-wide
vacancy crisis. Both City Comptroller Scott Stringer and NYC’s Department of
City Planning determined the issue of retail vacancies is isolated to certain
corridors and caused by a variety of factors.
The Department of City Planning report identified neighborhoods
challenged by high vacancy rates but this condition was not universal. “The
study found a wide range of conditions, with retail corridors subject to
multiple cross-currents that influence retail mix and vacancy conditions in
varied and complex ways. These include the rise of ecommerce, demographic
shifts, real estate market trends, local building stock, and other conditions
that may vary from street to street.”
According to the Comptroller’s study, longer wait times for
government approvals is a major factor, “the share of Department of Buildings
alteration permits unapproved after 30 days is a significant driver of retail
vacancy. A one percent increase in this metric is associated with a 3.28
percent increase in vacant retail square footage. Although this metric fell
sharply between 2007 and 2018, it increased substantially in 2018, particularly
outside Manhattan. The average number of days it takes to get a liquor license
is also a significant driver of retail vacancy… In 2018, liquor license
approval times increased city wide from roughly 50 to about 75 days, an
increase of nearly 50 percent.”
Across the country, the retail landscape is undergoing a
transformation driven by the rise of e-commerce. Not only New Yorkers, but
Americans everywhere are changing the way they shop. The Comptroller reported,
“online sales have been a significant driver of outer borough retail vacancy in
particular.”
The commercial rent control bill fails to address these and
other real factors that cause small retailers to struggle. They complain about
the threat of the city’s restrictive zoning policies and other regulatory
requirements. Fast rising property taxes are perhaps the most pressing burden
on small retailers that is not recognized in the legislation.
Additionally, the proposal does not take into account the
needs of homeowners and “would create a significant hardship for the
cooperatives and condominiums that have commercial spaces. The residents of
co-ops and condos pay New York taxes and have to live in the building, but
commercial tenants may live in another city or state and not care about the
quality of life of the residents. This proposal would force residents to live
with a commercial space that they may not want in their building,” said Mary
Ann Rothman, the Executive Director of the Council of New York Cooperatives and
Condominiums.
The wide array of voices in opposition to this proposal
should be heard and new measures should be considered to ease the burdens on
small retailers.
Data and facts should always guide our policy making
decisions. Let’s protect and strengthen
our small retailers with fact-based solutions instead of rehashing old ideas
based on often repeated myths.
