As noted last Thursday, the Marshal served eviction papers to Mercadito … and while we've seen these situations work out between the landlord and tenant a few times, that's not the case here. Mercadito has closed for good at 179 Avenue B between East 11th Street and East 12th Street.
While there isn't any mention of a closure on the Mexican restaurant's website or social media properties, the phone has been disconnected … and the Avenue B location has been removed from the company website...
Said one EVG commenter, "They closed because their lease was up and they were going to triple the rent. Hard to imagine another restaurant that would be profitable given how popular it was."
In any event, that appears to be it for Mercadito's NYC presence. Mercadito Grove in the West Village closed last fall. And Mercadito Cantina at 172 Avenue B closed in January 2011.
Previously on EV Grieve:
About Mercadito Cantina closing: 'Open letter to EV Grieve and CB3'
17 comments:
When you take a rent and TRIPLE it you are talking about callous Landlord greed. These stores are more than way destinations for customers they are also jobs, jobs for people who for the most part are living paycheck to paycheck. A individual invest to create a business develops that business turns it into a livelihood supporting themselves and others.And some "owner" of brick and mortar comes along and destroys the enterprise for no other reason but "give me" it may be legal but it sure as hell not moral.
As I predict this space will sit un-leased for months (at least), I have questions. Any commercial tax accountants reading? I'm curious how it is profitable to keep a space vacant or have high turnover. I realize the tenant assumes most of the risk, but, there are costs with just owning property. People frequently mention the "write-off" for vacant property; but, I want details -- how does that work?
As a follow up to olympiasepiriot,
my understanding is that there is a tax abatement of some sort, which lowers the cost of keeping a retail space vacant. Does anyone know if this is true, and exactly how it works.
What local pol can be contacted to overturn this and increase the incentive to rent these spaces?
The way it works is fairly simple: the more cash flow a property generates, the higher the valuation of the property. Owners are willing to take a financial hit to their short term income in order to get a higher valuation on the property once a lucrative lease is signed. Then they can either flip the property for more money, or cash in with a big a credit loan from a bank, which is what operators like Ben Shaoul do all the time to get cash out and buy more properties.
It's heads they win, tails we lose, which is why they don't care how many tenants are pushed aside in their never ending quest for ever bigger luxury beachfront mansions in the Hamptons filled with hookers, coke and bright yellow Lambos.
I was told a long time ago that a landlord can keep a space vacant and write off on his/her taxes the amount of rent that would have been collected had there been a tenant - meaning, if it's true, that they can pretty much make up a number and give it to the taxman as a nice deduction.
Gojira might be on to something. If I were a landlord making high rent profits, and I can declare triple the commercial rent of a property as a tax write off in profits I can reduce my taxes quite a bit. I am still losing money in that commercial property, but if I add the key money I will get from the next commercial tenant this could make sense. We desperately need to regulate these landlords, they are not going to do what's best for the neighborhood, only what works for their business of owning properties.
Don't empty storefronts attract, trash, graffiti and other forms of vandalism?
Property Management Biz. is the real reason for the high prices for the newcomers. That is how it is working these days.
What is happening with Odessa??
Let me assure you, building owners do not benefit from having an empty store. There is no special tax credit from running your business/property poorly.
Then please explain, Anon. 12:30, why it is that *so* *many* landlords are willing to shut down viable, healthy businesses and let the spaces sit empty for astonishing lengths of time unless there was something in it for them financially? One of the earliest post-1980 losses to the neighborhood was a well-run and successful hardware store on the corner of 11th and B, there since the 1920s, where the pizza restaurant is now; it was forced out by the building owner in the mid-1980s as a result of the art gallery influx to the East Village, and the storefront sat empty for FIVE YEARS until Rue St. Denis Vintage Clothes moved in. You cannot tell me that the owner just sat by and lost money for 60 months; that's not how vampires work. He had to be getting *some* kind of return on not collecting rent.
I don't think that's true Gojira.
This article does a pretty good job of explaining NYC's vacant storefront problem: http://nypost.com/2014/04/26/the-hidden-proof-the-economy-is-still-awful/
The bottom line is that NYC has an $80 billion dollar budget. Over 25% of that money comes from property taxes- mostly commercial. Mayor DiBlasio wants to spend MORE money on schools, the homeless, etc. Where does that money come from if you implement some form of commercial rent controls/rent arbitration and lower rents- thus lowering the value of these properties? Who will pay the taxes to make up the difference? You? Where does the money come from for his 'affordable' housing?
@Ken - I'm sorry, but I don't think that article explains anything. How many times do you read, just in this blog or over at Vanishing New York, about establishments who WANT to stay where they have been doing business for years, who are WILLING to pay more than what they have been paying, but who STILL have to shut down because of outrageous landlord demands? There is SOME REASON why landlords are willing to let their storefronts languish empty, and again, they would not do so unless there were something in it that made it profitable or acceptable for them to do so. There isn't a landlord out there who's altruistic, and which one of them honestly believes that it's better to be making NO money than SOME money, especially when they are always whining about how much their costs to run a building are skyrocketing?
Gojira, it's basically because every landlord thinks their property is worth more than it really is, so it takes years for the market to catch up to the prices they are asking. We had one great retail tenant in our building for over 30 years, then the landlord decided they wanted more money, forced a successful business out, and the store has been empty for almost 10 years. It makes no sense, they could have charged them the same money and he would have made a fortune compared to the loss. They just don't care, obviously they make more than enough from the apartments to wait as long as it takes.
That tripling the rent story is bogus. There were supposedly all kinds of arrears going on there including unpaid taxes which can and will close a business. The owners weren't around and let the place go. The overall quality of Mercadito had gone down alot over the recent years. Another factor is that Avenue B is very slow for the past several years and the flow of business and foot traffic has declined incredibly.
Gojira
An income tax deduction may help landlords suffer the blow but it's not gonna make up for lost rental revenue.
It's more likely that vacant storefronts mean landlords think that they can hold out for deep-pocketed chains and get 2, 3 4 or more times the current price. Over the course of a 5 year or 10 year lease that amounts to a lot of money.
A tax on vacant properties would fix that post haste. The article I linked to earlier points out that it's what London does and why that city has so few empty storefronts. It might bring down the cost of renting commercial property too.
Small business advocates say an even better solution is to give small business owners rights equal to landlords when negotiating lease-renewal terms. That's what the Small Business Jobs Survival Act does and it needs to be allowed out of committee and onto the floor of the City council for a vote. #SaveNYC
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