The Real Deal New York

De Blasio to retail landlords: Fill the space or prepare to pay the tax

Mayor wants to see an end to property owners sitting on useful store space
April 02, 2018 02:30PM

Mayor Bill de Blasio and an empty retail unit on Greene Street in Soho

Vacancy rates along Manhattan’s prime shopping corridors have exploded in recent years, as rents stagnate and building owners would rather wait out the market instead of chopping their prices. That’s led to a new form of blight in neighborhoods like the Upper West Side and Soho that are hardly known for it.

Mayor Bill de Blasio, speaking with Brian Lehrer on WNYC last week, said he’d like to do something about it–or would like the state to, anyway.

“I am very interested in fighting for a vacancy fee or a vacancy tax that would penalize landlords who leave their storefronts vacant for long periods of time in neighborhoods because they are looking for some top-dollar rent but they blight neighborhoods by doing it,” he said. “That is something we could get done through Albany.”

The New York Post reported that Manhattan’s vacancy rates doubled from 2.1 percent to 4.2 percent between 2012 and 2017, citing a City Council report published at the end of last year.
“Many landlords prefer to wait for area rents to increase before committing their real estate to long-term leases with relatively fixed terms,” the report concludes.“If these landlords have deep pockets and large property portfolios, it may make more financial sense to claim a tax loss on vacant property than to rent at a non-optimal value.”

The newly elected speaker of the city council, Corey Johnson, has previously supported commercial rent control measures that could effectively bring many rents in the city and, for landlords, eliminate the option of waiting on a market rebound before leasing again.

In October, The Real Deal reported that retail sat vacant in nearly $1 billion worth of newly-bought Soho real estate. [NYP]Will Parker