If you’ve noticed the sudden disappearance of your favorite mom-and-pop pharmacy or Roti shop; if it feels like suddenly more gates are down than up at your corner bodega or local tailor; or if you’ve watched your go-to car wash and oil change spot torn down only to be replace by a bank branch or high-rise condos; that’s because, in Brooklyn, retail is struggling to keep up with the rapidly rising rents.

Residents aren’t the only ones getting pushed out.

A new report issued by the Office of Comptroller Scott Stringer shows the retail vacancy rate has increased 5.2 million square feet over the last decade, with Crown Heights and Bed-Stuy listed among those neighborhoods with the largest increases.

According to the report, while the city continues to grow through rapid new development, in 2017, the retail vacancy rate was at 5.8 percent, up from 4.0 percent in 2007.

Retail vacancy rate of Crown Heights/Bed-Stuy

And although Manhattan has neighborhoods with extensive empty retail space, retail vacancy rates are highest in the outer boroughs.

In the neighborhood area of Crown Heights and Southern Bed-Stuy, the vacancy rate in 2017 was 10.4 percent, with 264 empty retail spaces total– a 19 percent increase from 2016.

Retail vacancy rate of Bushwick/Bed-Stuy

In the neighborhood area of Bushwick and Northern Bed-Stuy, the vacancy rate in 2017 was 3.79 percent, with 176 empty retail spaces total– a 14 percent increase from 2016.

Vacant storefronts are not only a blight on neighborhoods, but represent a loss of potential economic activity, including lost job opportunities and income for New Yorkers, as well as lower tax revenues – as much as $185 million a year in sales tax receipts, the report noted.

The comptroller’s office says the increases can be tied to four main factors:

  1. Exorbitantly high rents. Retail rents rose by 22 percent on average citywide between 2007 and 2017.  In some parts of the City, the rate of growth was doubled over that time period.
  2. Increased property tax payments. Property taxes are commonly perceived as a responsibility of landlords rather than tenants, but many retail leases now include clauses making tenants contractually obligated to pay some or all of the property tax on the property they lease. The report finds that property taxes doubled in aggregate over the last decade. Retail tenants paid $2.3 billion in 2017, equal to roughly 23 percent of total retail rents paid.
  3. Regulatory hurdles. The share of Department of Buildings alteration permits unapproved after 30 days is a significant driver of retail vacancy. 
  4. A massive move to online retail shopping. The rise of internet retailing has changed the mix of retail space away from sellers of goods and toward service providers, including restaurants and bars.

Even as our economy has grown, many mom-and-pop stores have been left behind, transforming spaces once owned by local small businesses into barren storefronts,” said Comptroller Stringer. “This isn’t just about empty buildings and neighborhood blight, it’s about the affordability crisis in our city. We need to use every tool in the box to tackle affordability, support small businesses and ensure New Yorkers are equipped to succeed in the new economic reality.”

The comptroller’s office offers the following actions to help address high retail vacancy rates and create a more small business-friendly city:

Provide tax incentives for independent merchandise retailers in high-vacancy retail corridors.  The City should provide tax credits for independent retailers to help lower the cost of space in retail corridors with persistently high vacancy rates. The City should also waive permitting and inspection fees for businesses taking over existing space that has been vacant for a given period of time.

Create a single point-of-contact customer service for businesses occupying retail space.  To expedite and facilitate a change in use of retail space from goods to personal services, the City should create a multi-agency task force staffed with single point-of-contact customer service representatives to assist new businesses by coordinating and expediting the necessary regulatory actions.

Incorporate retail demand into neighborhood planning.  The City should require an analysis of retail demand in any major development proposal or rezoning, to ensure that the right amounts and types of retail space are incorporated into the planning process.

“New Yorkers have all seen the signs of our changing economy in the last decade, as vacant storefronts have become all too common and neighborhood institutions have fallen by the wayside. Our report shows the phenomenon of retail vacancies from one end of the city to the other,” said the comptroller.

In addition to these recommendations, the Comptroller’s 2016 Red Tape Commission spelled out 60 steps the City should take to help improve the overall business environment, including separating the enforcement and permitting functions of the Department of Buildings; improving the availability of street parking; and removing unneeded scaffolding and fixing blocked pedestrian walkwaysss, among others.

To read Comptroller Stringer’s full report, click here.

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2

  1. A study to show the obvious with the real goal to NOT tell the public the truth. That none of
    these empty stores would be empty if our lawmakers had the courage to stand up to the real estate
    lobby 10 years ago and pass the Small Business Jobs Survival Act which gives all
    businesses the right to renewal a 10 year lease and rights to equally negotiate
    new fair lease terms. Why didn’t Stringer give the Jobs Act in his recommendations?
    Until store owners have rights , all businesses are in jeopardy of closing when their leases
    expire. Don’t be fooled into thinking this study was done to benefit small businesses.

  2. Something needs to be done…how to the grimy bodegas with their questionable activity survive?
    I don’t spend any of my money in Bed Stuy. I travel to nearby Fort Greene, Clinton Hill for their variety in foodie spots. I shop for clothing at Gateway Center in East NY or go uptown to 125 or take a bus to Jersey.

    As for grocers, the number of people on the bus/train getting off stops in Bed Stuy with bags from Whole Foods/Trader Joes should give potential grocers a hint of what people want. I never use bodegas they’re over-run by “corner boys” where I live.

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