By David V. Griffin
Spiralling rents and pay hikes are leaving the city’s fine dining establishments with a sour taste.
And the white tablecloth standard our grandparents were accustomed to could become a thing of the past, according to Rohini Dey, owner of Vermillion Restaurants.
Dey was speaking on a panel during the Crain’s 4th Annual Real Estate Conference which also featured Wylie Dufresne, chef and owner of Alder; Georgette Farkas, founder & CEO of Rotisserie Georgette; and Jimmy Haber, managing partner at ESquared Hospitality.
The panel discussed the effect New York’s skyrocketing real estate has had on fine dining options and challenges faced in an industry where tips may be phased out, minimum wages raised and rent prices may prevent fresh talent from setting up shop in the city.
All agreed that a possible rise of the minimum wage to $15 an hour would be a potentially insurmountable challenge (Dufrense: “I’d close tomorrow”) but also agreed that the current tip culture leaves much to be desired, with Dufrense pointing out that chefs and kitchen staff often do not see the same potential for tip-based earning.
Rent hikes were another major hurdle, with Haber citing a recent tripling of rent for one of ESquared’s restaurant locations as “winning” and noting that second floor and outlier locations posed their own problems: “loss of foot traffic and walk-ins; rules against second story signage”.
“Finding a location is the biggest piece of the puzzle,” Dey observed, stating that new restaurateurs could “make vertical retail part of the answer or shrink your footprint, one of the two.” Farkas recommended “going where the landlords want you” and praised her own community board for their support.
Farkas added that “there will always be a place for whole service fine dining – but perhaps with less focus on the white tablecloth standard our grandparents are accustomed to.”
Dey agreed, saying that “increasingly lots of New Yorkers are eating out – even Thanksgiving has been ramped up as a major day for restaurants.”
During an earlier speech at the conference, Carl Weisbrod, chairman of the NYC Planning Commission, focused on the need to balance the continued success of New York’s economy overall with a need to make sure that middle and lower income New Yorkers could continue to live and work in the city.
Calling the present need for more housing “the true crisis of our time” and referencing both the 50 percent of New Yorkers who are rent-burdened and the nearly 60,000 people currently in homeless shelters, Weisbrod put estimated population growth at nine million by 2040 with a 40 percent increase in seniors.
Weisbrod said Mayor De Blasio’s current plan for increasing housing — which Weisbrod described as creating 80,000 new units of affordable housing, preserving a further 120,000 units and stimulating 160,000 market rate units in addition to an increased capital budget of $8 billion resulting in $34 billion in private funds — would have minimal impact on existing industrial zones and small businesses.
Weisbrod said the Mayor’s plan is “very careful not to rezone our industrial centers” and stressed that tactics such as eminent domain were not in play, “save perhaps in very specific cases having to do with public space.”
He cited a general distrust of density increases and admitted that there was only so much the City could do logistically and legally: “we won’t fully solve the housing crisis in the next decade unless there is a radical change in Federal housing policy, sadly an unlikely occurrence” – but concluded by saying: “we want to make things as flexible as possible” and “address the needs of each neighborhood in the language of each neighborhood”.
The event concluded with a discussion on the current state of affordable housing featuring Joshua Barro, for The New York Times’ blog; Lisa Gomez, L&M Development Partners and the Chair of the New York State Association for Affordable Housing; Seth Pinsky, Executive Vice President & Fund Manager at RXR Realty; and Steven Spinola, president of the Real Estate Board of New York.
Gomez opened the talk by quoting some of the hard numbers Weisbrod had previously stated: 50 percent of renters in NYS are rent-burdened; one fourth are paying more than 50 percent of their income; and 50,000 people apply annually for every 100 units of affordable housing in the city.
Her requirements for building affordable housing were simple: “You need land on which to build it and public and private partnerships to fund it.”
Spinola discussed the sometimes controversial 421A tax abatement, which he credited with generating nearly 275,000 units of affordable housing since 2002. That said, he was up for a redefinition of what affordable housing entails, pointing out that “the 80/20 ratio doesn’t work for all areas, because the rent prices won’t cover losses.”
Pinsky reflected that there was a difference between affordable housing and affordability over all. “It not just a housing problem” he said, pointing out that new development tended to replace the least market-attractive buildings – which tended to be the industrial and small business locations that provided low income renters with their jobs in the first place.
Gomez said that the current state of New York was a complete reversal from the 1970s when the City itself was a major landlord and hundreds of foreclosed and abandoned properties could be upgraded into affordable housing; Spinola agreed, saying that “we’ve seen neighborhoods that – even 15 years’ ago – we never thought would be viable take off.”
The question of density came up, with Gomez saying that density should occur “where it can absorb its own cost” and that simply raising the height limit citywide would not be a practical solution; Spinola thought that density should be higher closer to subway and other major mass transit links and “taper off” from those locations.
Pinsky suggested that the overall Greater Metropolitan Area could be rezoned for low-income housing, which Gomez and Spinola thought unlikely due to long-standing resistance to such development and the related costs of transit into the city eating up any savings in rent.
In all cases, speakers were cautiously optimistic about the current discourse, with Spinola saying “just the fact that the current mayor is willing to address these issues means we’re going to get something done.”
