Union Square Cafe is latest victim of rising rents

Restaurateurs say viable rents are becoming elusive

TRD New York /
June 24, 2014 01:35 PM

Restaurateur Danny Meyer is the latest owner to lose his grip on a celebrated eatery due to skyrocketing rent. The imminent shuttering of Union Square Cafe is opening old wounds for restaurant owners forced out of the neighborhoods they helped rehabilitate.

Meyer will move Union Square Cafe out of 21 East 16th following amicable but unproductive negotiations with his landlord, Ari Ellis of David Ellis RE, the New York Times reported. Union Square Café has occupied its current space for nearly 30 years. That spot goes on the market this week.

Meyer had a sweetheart lease, paying about $8 per square foot, or $48,000 per year, according to the Times. Brokers for Robert K. Futterman plan to market the space for $650,000 per year.

“It’s better for them as a restaurant business if they go elsewhere, and it’s better for us as a real estate business if they go elsewhere,” Ellis told the Times.

Meyer said it did not make financial sense to tap his personal wealth to keep the restaurant in Union Square. Meyer also runs Gramercy Tavern and the Modern, and his Union Square Hospitality Group operates the Shake Shack burger chain.

Manhattan restaurateurs interviewed by the Times said rents are exceeding what they call viable rates of 5 to 10 percent of gross revenue. Other notable restaurants facing relocation are WD-50 in the Lower East Side and Hearth in the East Village.

Bobby Flay, who closed Mesa Grill last year when his rent doubled, weighed in, saying, “Eventually, they’re going to drive away all the people and places that make New York City interesting.” [NYT]Tom DiChristopher

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