The Real Deal New York

Playing by the book: Why some landlords are leasing to independent bookshops

Property owners say they’re not able to max out on rents, but the stores bring “cool factor” to buildings
By Eddie Small | November 21, 2017 08:00AM

Greenlight Bookstore at 686 Fulton Street in Brooklyn (Credit: Greenlight Bookstore, Illustration by Lexi Pilgrim for The Real Deal)

For landlords, leasing retail space to an independent bookstore almost certainly means leaving money on the table — other commercial tenants, like banks and pharmacies, can generally pay higher rents.

And the continued dominance of Amazon has threatened the business model of smaller shops and chains alike. New York City has seen a series of high profile closures in recent years, including P.S. Bookshop in Brooklyn, La Casa Azul Bookstore in Manhattan and Barnes & Noble in the Bronx.

But recently, multiple New York property owners have leased to these businesses, citing the needs of the community and the “cool factor” that an independent bookstore can bring to a building.

“It’s almost certain that an owner is sacrificing some rent by bringing an independent bookstore into the building,” said CPEX Real Estate managing partner Tim King. But he noted that “having an independent bookstore is a place that, for better or worse, kind of becomes the old-fashioned town square where people meet.”

The Bronx has been without a bookstore since the Barnes & Noble in Baychester closed last year. But that will soon change, thanks to a lengthy campaign by Bronxite Noëlle Santos.

Santos, who said she has spent years trying to bring an independent bookstore to the borough, recently signed a lease for her shop in JCAL Development’s project at 131-135 Alexander Avenue in Mott Haven.

“I’m doing the fun stuff now,” she said. “Finally hiring, choosing inventory, which is probably my favorite part.”

Asking retail rents in the JCAL building are $40 per square foot, according to the company’s president, Josh Weissman. He said this was “on the higher side” for Mott Haven and that space in the neighborhood tends to go for between $30 and $40 per square foot.

Santos’ bookstore, called the Lit. Bar, will occupy 1,700 square feet of ground floor space and 600 square feet in the basement. But she’s not solely relying on income from book sales — she’ll also operate a wine bar on the site.

King said it was not unusual these days for retailers to have their stores serve multiple purposes in order to better attract customers.

“Retailers are doing whatever it takes to bring people into their space,” he said. “I think the primary focus clearly is on the goods they’re selling, but then the question is how do they develop better relationships with their clients? How do they attract people to come and stay longer?”

JCAL’s four-story Alexander Avenue building includes 14 apartments, and a bar and restaurant called Beatstro has signed a lease at the project as well. Weissman said they fielded offers for the Lit. Bar’s space from more staid institutions such as insurance offices but didn’t feel they were the right fit.

“This sort of fit into the whole nature of that block. People can come and eat dinner on Alexander Avenue and then go to [Santos’] spot and have dessert or wine and a book,” he said. “Obviously I need her to pay her rent every month, but I feel confident that she’ll be able to do that.”

Alison Novak, principal at Hudson Companies, made similar points when describing the firm’s decision to lease space in their Prospect-Lefferts Gardens building at 632 Flatbush Avenue to Greenlight Bookstore. It is the shop’s second location in Brooklyn.

Novak said leasing to Greenlight Bookstore was a good way to get people excited about living in the 24-story project’s residential units. From an economic standpoint, she said the rents they were getting from the apartments would more than make up for not maxing out rent in property’s retail portion.

“It’s OK if we don’t blow it out of the park on rents for the 700 or 800 square feet on the ground floor,” she said, “because we’ve got all the other apartments to rent up.”

The average asking rent for retail space in Brooklyn over the summer was about $149 per square foot, according to a report from the Real Estate Board of New York, which looked at rents in nine different Brooklyn neighborhoods.

Greenlight Bookstore takes up roughly 1,600 square feet of sales space on the first floor of 632 Flatbush Avenue, along with an additional few hundred square feet of office space, according to co-owner Jessica Stockton Bagnulo. She said that already having an outpost in Fort Greene helped Hudson realize that an independent bookstore could benefit the neighborhood without damaging the company’s bottom line.

“I think our initial contact was very enthusiastic,” she said. “But there were a lot of other people in the organization that had to be convinced.”