Thursday, June 24, 2010

Of the 147 storefronts on Avenue A, 70 of them are bars, restaurants or vacant

Yeah, that got my attention the other night during the Community Board 3 meeting. Between November 2009 and May, CB3 Urban Fellow Paulo H. Lellis conducted retail research "to examine the concerns of business operators in Community Board 3 and obtain information on the diversity of business in the area."

Lellis gave a quick overview of the fairly massive report on Tuesday night. (We'll get to more on Avenue A in a minute...)

A few quick items about ground-floor retail in the CB3 area (from 2009):

Average monthly rent: $8,097.90
Average square footage of retail space: 1,464
Average annual rent per square foot: $77

I know what you're thinking: "Gee, Grieve, this is super, but how does it compare with, say, Harlem, the Meatpacking District or the Financial District?"

Glad you asked!

Average annual rent per square foot in Harlem: $75-$200
Average annual rent per square foot in MePa (sorry!): $400-$450
Average annual rent per square foot in FiDi (sorry!): $100-$400

A few more facts:

As of 2009, there are 151 chain stores in the 10003 zip code -- the third-most number of chain stores in 30 NYC zips... (The East Village Community Coalition examined formula zoning in 2008... see that report here.)

Oh, I could go on with stats. But you can find all these reports yourself at the CB3 site.

First, though, here's an overview of what Lellis was looking to find...

The research consisted of a survey of business owners/managers on 9th Street between 1st and 2nd Avenues which sought to prioritize business concerns. Two retail use surveys were also carried out in order to provide information on the types of businesses located on Avenue A and 9th Street. Additionally, a shift-share analysis was conducted to determine the change in the growth of local retail and accommodation & food service establishments relative to Manhattan and New York City between the years 2002 and 2007. The fellow also examined CB3 commercial retail rents relative to other neighborhoods.

The fellow’s research revealed that taxes were reported to be the primary concern for business owners/managers and utilities were the second largest concern. Additionally, the research revealed that retail did not experience the same favorable growth as the accommodation & food services sector in Community Board 3 despite being relatively better off than Manhattan and New York City in terms growth of establishments. Lastly, the surveys provided a basis from which to continue to examine the issues of retail diversity and rents in the community.

I'm particularly interested in his findings on Avenue A, something which I did rather informally earlier this year.

Here's what he found...

Basically, there are 51 bars, restaurants and lounges on Avenue A, which accounts for 35 percent of the storefronts... then... there are 19 vacant storefronts, which account for 13 percent of the storefronts... then... there are 15 delis and groceries, 10 percent of the total storefronts. (There are 147 storefronts in total...)

By the way, he also examined Ninth Street between First Avenue and Second Avenue... perhaps I'll highlight that report another day...

So what does all this mean?

Based on his results, the following options for consideration and suggested areas for further inquiry are presented to the CB3 Economic Development Committee:

1. Inform local businesses about existing services available to help them negotiate leases with favorable provisions on taxes
2. Encourage "on-bill financing" of energy efficiency improvements for businesses as a means to achieve cost savings
3. Incorporate research on retail diversity and options to address the issue, like formula zoning, as an ongoing project for future community board fellows
4. Continue to explore the issue of retail rents in the neighborhood and possible ways to address this concern through programs such as tax abatements

Anyway, there are reports galore at the CB3 website. In the short term, well, I think I'll go to Ray's for a hot dog...


Brian Van said...

Interesting stats... I mean, I would have liked to see the Frank's/Supper team open an additional restaurant, but you make a great case as to why Avenue A would suffer for that. (I still hold my opinion that it's some other restaurant's time to go under on that strip, instead... there are a few cursed spaces, and much of it just isn't very good or notable)

Lower Avenue A, in particular, used to be much more vibrant in retail. That whole west side of the street between 2nd and 3rd is obviously being left open by a less-than-social landlord (I'd bet he's trying to overcharge for the spaces). There should be more data collected about the daytime pedestrian traffic in that neighborhood, so that either businesses can be convinced it's worth the hassle to open down there or that something can be done to make it more friendly and appealing.

There is also the case to be made that the Avenue is a really smart place to stick all of the noisiest establishments, so that the bulk of the residents on the side streets can enjoy their peace and quiet. Perhaps transitioning the residential buildings on the Avenue to daytime small business office lofts (wherever possible) would increase daytime pedestrian traffic, invite more retail, maintain the tax base (or raise it), and be of more benefit to the community than trying to stifle new restaurants (ones that don't intend to be dive bars late night). At least that's a plan that doesn't stick residents above bars that aren't going away anytime soon.

EV Grieve said...

Thanks for the comment, Brian. That stretch on A between Second and Third is owned by the NYCHA... I'm amazed the Essex Card Shop has survived there for so long. (And I'm glad that it has — one of the few stores around that sells reporter's notebooks...)

During these recent CB meetings, I've heard several residents say there isn't enough retail on A — everything relates to nightlife... that there's nothing to do during the day... I'm not sure about that, but my needs are likely different from someone else's... In any event, I'm happy that Mast opened... I know that I'm currently in fantasyland with this thought, but I'd love to see more shops like that open here... curious what other people think of your plan... something needs to be done to stimulate retail here.

Richard D James said...

Great info / Research!!!

Unfortunately, it's pretty depressing. I used to run a very successful music retail store (one of the few still in business). Our store is/was a 2nd floor retail space (bad for business but cheaper rent) and about 5 years ago, we paid $3,750 for rent - it was TOUGH to pay.

So - let's take the bookstore that recently opened on Ave A btw 4th and 5th. Let's SAY they got a "good deal" on rent and SAY they are paying $6,000 a month (25% under the average listed above). Let's also say their average book price is $6. That means they have to sell 1,000 books PER MONTH just to cover their rent. This doesn't include their utilities (my guess $300-400 per month), their salaries, their insurance, nor their taxes (WHICH ARE INSANE). 1,000 books a month is about 33 books a day - that sounds possible, but I can only imagine how tough that is. We haven't even evaluated their inventory costs or their average markup - realistically, they probably need to sell 60+ books a day to get by.

Why am I breaking this down?

I am trying to illustrate why there is such little diversity in NYC retail, specifically in the East Village. I know many folks on here say they want clothes, or music, or more diverse stores - but the reality is - it's unlikely. The other reality is, I bet you buy your clothes at chain stores, your books on Amazon, and your music on iTunes - not accusing, it's just statistically true.

Restaurants, and bars are the MOST viable businesses for the EV. In the last decade+ it has solidified itself as a "destination" for nightlife in NYC. For many years, this was great, however, it's peaked, and now the former frat boys, and iBankers have discovered our hood, and we wont get it back.

Instead of trying to block ANY and ALL new restaurants and bars, maybe we should be thinking about how to create a better alliance between them and the residents. Maybe we should encourage more businesses that cater to the locals and not the folks who come down from the UES on Friday and Saturday. Maybe the community board should look into how they can create incentives for NON-bars and restaurants, b/c as is - it's just not really viable for many other kinds of businesses (except banks - ha).

glamma said...

we need more mom and pop shops. period. stores that cater to the common man rather than exclusively to rich yuppies will restore a tiny little bit of the massive, rapid social imbalances that have plundered the neighborhood in recent years. that is why the new bookstore gave everyone so much hope and relief...

Nathan said...

These are interesting stats -- thanks for sharing.

What I find even more interesting is that if you add up the total number of food/liquor establishments (this includes pizzerias, cafes, delis/grocery stores, liquor stores, etc.) the total is 79 out of 147 store fronts.

(Obviously, I realize that not all of these are created equal -- Key Foods, for instance, would be included in this tally). None the less, it makes it even more clear that unless you are looking for food or drinks of some sort, Ave. A is probably not your ideal destination.

I do think that Richard gives very good analysis about the challenges facing retail and restaurants not selling high end or extremely high volume items. Unless you have a magic bullet that can cut rents by 30-40%, it's going to be tough for businesses aimed at the middle to survive.

Richard D James said...

@ Glamma See above and see why we don't

PS: Is Lil Frankies a Mom & Pop restaurant? I would say yes, small company, owned locally...just saying.

WB said...

Great comments.

Richard -- I think Mast's average book price may be higher than $6. They certainly have books in the less expensive range, but they also sell a lot of nice art books. Those seem to sell at discounts from their cover price, but still much higher than $6. And they have a lot of unique books that I've not seen elsewhere. But anyway, yeah, the economics are daunting when you throw in taxes and insurance, both of which can be substantial.


EV Grieve said...

Thanks, WB... I appreciate the thoughtful comments

RickyAveA said...

Regarding the desolate, west side of Avenue A between E 2nd & E 3rd, is there something preventing the New York City Housing Authority from leasing to such desired local and/or mom & pop establishments?

The link above is to the storefront listings available at 31, 35 & 37 Avenue A. The asking rents seem reasonable at $59.50 per square foot, compared to the average of $77 quoted in the Lellis study.

I've noticed that there has been an application out on 37 Avenue A (the corner of E 3rd St) for quite a long while now. Is the NYCHA dragging its feet in leasing to qualified businesses?

It would seem to me that a city-owned agency like the NYCHA would be much more amenable to signing a lease and filling vacant space than other landlords. Is there someway to find out why they have not leased these stores for years now? Is there something the community or a CB3 subcommittee could do about this?

Jill said...

This is very interesting, and confirms what we all know. What I am excited about is that 9th Street is taking action to figure out what to do with their situation. The best dress shops in the city are here, and I absolutely shop there before going anywhere else when I need a new dress. I can't always find what I want at my price, but often I can.

I was speaking to someone recently who is doing some research, which hopefully she will publish soon. I don't want to reveal her findings before she publishes them, but her numbers show the same thing as this report - Avenue A is getting the brunt of the liquor licenses in recent years.

What I don't understand is why the Upper East and Upper West sides have such a diverse retail environment while maintaining strong residential buildings (more coops & condos though), while the rents in the EV can't support those types of stores. Granted, they have a lot (A LOT) more chain stores, but they also have boutiques and mom and pops, as well as bagel stores and other small businesses that are dying downtown. What makes them so different and successful that we can't emulate in the EV?

Anonymous said...

Don't chain stores include franchises? Aren't franchises run by mom-and-pop people because it's cheaper than establishing your own name and comes in with a built-in customer base and corporate support? I've always been under that impression, I don't know if it's true. I knew a nice family that ran a Dominos and they were always having to explain to people that it really was a local business.

When I think of independent/non-chain stores in the LES/EV I think of salons where a haircut is $150 and those boutiques that sell $300 sunglasses and four tshirts in a size 2. I can't really afford that stuff - chain stores to me = cheap stuff, independent shops = expensive. I know I'm probably paying for quality but sometimes I just can't afford it.

prodigal son said...

To be fair, the UES at least is unbalanced in the other direction. Stores tend to close early in the evening, there are almost no stores on a seven block stretch (between 63rd and 70th), and the streets can be so deserted at night that it feels creepy when you walk around.

Richard makes some good points. Ultimately, this is caused by rents and real estate prices being too high, and unfortunately it is one of the US federal government's policies to keep real estate prices high (in the 1940s high housing prices were viewed as a major problem and Truman devoted the better part of one speech to Congress on how to keep them down). New York bears the brunt of that. Its not even the city government's fault except I can't stand the extent to which Bloomberg cheerleads for this.

EV Grieve said...

These are all really constructive comments...thank you.

I've always been curious about the business model for salons and spas... How do/can they afford the rent? I like to do a count some time of'd how many nail salons and massage places there are in the East Village...granted, some of these places don't stay open long...

glamma said...

all the commercial landlords in the east village should be invited to a giant meeting where we discuss the integrity of the neighborhood and the future. everything comes down to these people. the more prudent they are about what tenant they will lease to for what amount psf, the more they will protect their future interests. if they continue to do nothing but get the highest paying tenants possible, the EV will finally becomes one giant cesspool of a mall, and will cease to be hot or profitable for them. charm lasts forever. hype expires.