Four years ago this month, a shoe shop left the prime retail space of 518 Broadway. It’s been vacant ever since. Some of the lofts on the four upper floors have sat empty as well.
The longtime owners of the Soho building, Jack and Rina Cywiak of Lakewood, New Jersey, say they have had offers for the unoccupied space, but at rents so low that they would still be losing money. Instead, they collect nothing.
Prospective tenants offered $250 per square foot for long-term leases for the ground-floor retail and $30 per square foot for the lofts, the owners claim in court documents. “Entering into long term leases at these low rents would make the building unsustainable for the future,” their petition says.
Soho is one of the city’s prime retail destinations, and the Cywiaks expect 518 Broadway’s ground floor to generate 80 percent of the building’s rental income. That is based on their having leased it to high-profile tenants such as Dune London, a U.K.-based shoe brand, which opened its first U.S. outpost at the location in 2014. Time Out magazine marked the opening with a writeup.
But since the shoe shop closed in October 2016, the property has generated nothing but grief for the couple.
Reached by phone, Jack Cywiak said he was too busy to discuss the building, which has been in his wife’s family since 1968 and under the couple’s direct control since the 1990s. But he did say, “We’re trying to find a tenant or sell it. One of the two.”
Meanwhile, they are challenging the city’s assessment in court in an effort to lower the property tax bill, which they say is too high for a mostly vacant building.
The five-story property’s gross income, which once was $715,000, has declined to $270,750, their petition states, noting that the building has been operating at a loss since 2018 even though Jack Cywiak has forgone his management fee.
Jack & Rina, the limited liability company through which the couple own the building, paid the city about $408,000 in property taxes in fiscal 2019 and $439,000 in fiscal 2020. The Cywiaks challenged 518 Broadway’s $3.63 million assessment before the city’s Tax Commission this year and won a reduction to $2.9 million, according to Property Shark. But they are looking for more in state court.
Their petition notes that the rent picture in Soho is not likely to improve, given the pandemic. That point will not likely help their case, though, as assessments are based on properties’ status as of Jan. 5, prior to the pandemic. The timing is a problem for property owners across the city this year.
But the retail sector’s troubles go back several years, in part because of a shift to online shopping. A CBRE report this month noted that the average asking rent in Manhattan’s prime retail corridors has declined for 12 consecutive quarters.
The Cywiaks will have a stronger argument for an assessment cut next year. In the Soho corridor that includes 518 Broadway, the average asking rent has declined by 20 percent from a year ago to $388 per square foot.
Still, it is unclear why offers for 518 Broadway, between Broome and Spring streets, have allegedly come in so much lower than that. The building was reportedly renovated in 2014, and Google photos from October 2019 show active storefronts in all the properties around it and dozens of pedestrians on the block. Berta NYC, a line of high-end evening wear and bridal gowns, maintains a showroom on the second floor.
Joseph Frank, an attorney and broker for the property, declined to comment.
Erik Engquist contributed reporting.