An SOS for Local Shops

The grassroots advocacy group UWS Save our Stores, aptly referred to as “SOS,” hosted its first town hall meeting on “Vacant Storefronts and Visions for Neighborhood Revitalization” last Thursday. SOS is focused on the epidemic of storefront vacancies in the Upper West Side (UWS). Newly formed, the group has already attracted the attention of local politicians. The meeting was standing room only and boasted a panel with Comptroller Scott Stringer, Manhattan Borough President Gale Brewer, City Council Member Helen Rosenthal, State Senator Robert Jackson, and State Assembly Member Linda Rosenthal.

In a recent report, the Department of City Planning found that 12.8 percent of UWS storefronts were vacant on average from winter 2017 to fall 2018. SOS founding member and president Beth Krieger said SOS recently counted 66 vacancies in the Broadway corridor, raising the vacancy rate to 20 percent. An SOS slideshow highlighted that the “industry standard for a ‘healthy’ retail vacancy rate is 5-10 percent.” Krieger summarized the main drivers of vacancies as regulatory hurdles, e-commerce, and high rents and property taxes. Scaffolding and goods rental services like Rent the Runway were also cited as vacancy drivers.

Retail Suffers as Services Do Well

Regulatory hurdles create “an unfriendly retail environment,” Krieger said. Panelists shared her concern, discussing how the expense and length of bureaucratic processes such as updating a landmarked building, community board approvals, and city agency inspection and permitting procedures, make opening or improving businesses more challenging. Brewer was particularly concerned about the city slapping businesses with massive fines for minor infractions and suggested giving inspectors more discretion in doling out fines.

Comptroller Stringer summarized findings in his September 2019 report that higher rents and property taxes, and competing with online shopping means retailers have had the most difficulty staying open. Comparatively, he said businesses that provide services like “doggy daycare” are doing well, because “Amazon hasn’t figured out how to get your dog home from a wash and mail it to you.” SOS co-founder Debbie Spero said in an interview that the shift to services is a natural response to easy, inexpensive online shopping.

Amazon and other e-commerce sites may not be running mom-and-pop shops out of business. Spero has noticed that “e-commerce has hurt the big chains” more than independent shops. Assembly Member Rosenthal remarked: “now even Duane Reades are leaving? That’s a real problem.”

Legal and Taxation Strategies

Senator Jackson took an impassioned stand in favor of the controversial Small Business Jobs Survival Act, urging audience members to push the City Council to pass it. The bill would help stabilize commercial rents by affording tenants the rights to renew longer leases and fairly negotiate the terms with their landlord. Brewer said it merits further discussion, but emphasized it affects all renters, not just small business owners. She stressed the need for renter negotiation rights, pointing out that even she cannot get some landlords on the phone. Other panelists suggesting researching once-stigmatized commercial rent control policies as well.

In response to a question on how to preserve supermarkets on the UWS, which has seen several closures despite a high demand, Council Member Rosenthal described how the commercial rent tax contributes to low profit margins. She said the tax affects Manhattan retailers south of 96thstreet. It brings in nearly $1 billion for the city budget, but Rosenthal does not think Manhattan should be the city’s “ATM.” She wants to raise the minimum taxed rent to $1 million and increase the tax on rents starting at $10 million to maintain revenue neutrality and relieve the burden on owners paying lower rents. Brewer wants to eliminate the tax altogether for grocery stores.

"Shop Local This Year!"

The room erupted in applause when Senator Jackson discussed his vacancy tax bill and Assembly Member Rosenthal’s companion bill. Rosenthal explained the tax starts after a six-month vacancy and amounts to one percent of the assessed property value. She noted that Washington D.C., San Francisco, Philadelphia have already passed similar bills. Rosenthal believes the reason most landlords keep storefronts vacant is to wait until they hit “the jackpot when a bank or a Home Depot would occupy the space.” Rosenthal dispelled the misconception that landlords receive tax write-offs for vacant storefronts, explaining vacant properties are assessed at lower values.

City Council Member Rosenthal discussed her recently passed storefront tracker bill that requires the city to register all commercial storefronts, vacant or filled, and add them to a public database. This legislation will help the city better understand current vacancies and areas at risk. She also described the need for legislation to make property assessments transparent, because they often assess values too high and change them only after appeal.

At the end of the meeting, Rosenthal made the crowd pinky swear to “shop local this year.” Brewer enthusiastically shouted, “I do!”