Put Down That Government Crutch

There is an article in the NY Times today detailing a problem that I’ve been observing for almost two years now – the proliferation of vacant retail space in NYC. Rents are still so high that it seems that every time a store’s lease comes up for renewal, they have to close up shop. The Times article mentions storefront vacancy rates of roughly 6.5% citywide, with the rate expected to climb to 10%.

“And those numbers do not capture the full story. Some of the more desirable shopping districts are littered with empty storefronts. For example, Fifth Avenue between 42nd Street and 49th Street, the stretch just south of Saks Fifth Avenue, has a vacancy rate of 15.3 percent, according to the brokerage Cushman & Wakefield.

In SoHo, from West Houston Street to Grand Street and Broadway to West Broadway, among the high-end boutiques, art galleries and restaurants, 1 in 10 retail spaces are now empty or about to be.

“I’ve never seen such an across-the-board problem,” said Lorraine Nadel, a lawyer who has represented tenants and landlords for 18 years. “Store owners can’t pay their rent, and they can’t keep their businesses going.

It has long been difficult to run a small business in Manhattan, but a number of struggling store owners cite high rents and their landlords’ unwillingness to negotiate as the leading obstacles to their survival.”

What disturbed me was when I got to the line,

“But as jobs disappear and neighborhoods suffer, the tide of opinion is growing that the government may need to step in.”

Ummm- the government may need to step in and do WHAT exactly? There is a problem with Manhattan retail spaces – the rents are too high. It’s that simple. The best thing the government can do is to stand idly by and let the rents fall to levels where business owners can afford them again. This is exactly what they should be doing with residential real estate too, incidentally – instead of thinking of new ways to prop up home prices, keeping them UNaffordable.

-KD

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