Bodegas: the corner store vs. market reality

Nov.November 20, 2007 12:22 PM

Rafik Alnajar opened his deli-grocery on 96th Street and Second Avenue 15 years ago, when his block bordered the great chasm between the Upper East Side and Spanish Harlem. The divide has since narrowed, but Alnajar is being forced out because his landlord, he hears, wants to lease to a 7-Eleven, a national chain synonymous with the term “convenience store.”

He’s reluctantly looking at a 1,200-square-foot space in Harlem on 117th Street for $4,000 a month. “I don’t want to go over there. I want to stay here,” the Yemeni immigrant said in an interview at his Optimo Deli.

Once a fixture in Manhattan, the independent, immigrant-run deli or candy store is fading away, brokers say. Chain stores are uprooting them from the Manhattan corners where their flashing lights or flower displays had seemed like a fixture.

“They are really being transformed from what was formerly the old-school bodegas to the Caf Metros and Subways,” said Matthew Gorman, vice president of retail services at CB Richard Ellis.

For a host of reasons, landlords prefer chains over the bodega or Korean deli. “In most instances where landlords have a bodega or some variation on a bodega, they would opt for some recognizable name, either nationally or regionally,” said Jonathan Krivine, who handles retail leasing in Manhattan as senior managing director at Garrick-Aug Associates.

But owners of the city’s 14,000 bodegas aren’t giving up meekly. They are pestering brokers to find them new space and calling when signs go up in windows looking for tenants. “Any [broker] can hang up a sign on a building and lease space to a bodega,” Gorman said.

Adam Kessner, president of Vertical City Realty, which focuses on East Harlem and Harlem, has deli-grocery operators nearly banging down his door. One even offered a $50,000 bonus in an unsuccessful attempt to get a space. Kessner has a list of at least 35 such operators, including Alnajar, among his clients. Almost universally, he said, they are immigrants from the Middle East, meaning the new shorthand for the city deli grocery may need to be in Arabic.

Finding them space is hard – the chains are also flocking Uptown – but Kessner said that landlords without prime spots are open to them. Deli groceries are typically willing to pay up to $4,000 a month in rent. “You are not going to make a ton of money,” Kessner said of deli-grocery leases.

“They are not high-profile type tenants,” he said. “They are just neighborhood-type tenants that are really able to support the rents.”

The irony for deli-groceries owners is that the chains may be underbidding them.

“At the end of the day, Jamba Juice or any of these chains may well be paying less than the traditional Korean deli,” said Krivine. But the chains are better capitalized; the owner gets a new interior and exterior and there’s a recognizable corporate name on that long-term lease. “So you get the peace of mind of a corporate parent and then you get the investment,” he said.

Bodegas also have an image problem. “The image of them is so run-down,” Gorman said. “So they need to spend some money to clean up their act. And that is not easy to do.”

The locally-based Bodega Association of the United States counts some 7,200 bodega owners in New York City as members, about half the city’s total. The group didn’t respond to calls as of press time, and did not comment on any drop-off in the number of bodegas in the city. But as brokers say they see bodegas receding from the landscape of Manhattan, they feel some regret.

“As a resident of Manhattan, I am nostalgic for the late-night accessibility of the corner deli or bodega,” Krivine said. “You are so grateful to be able to get what you need spontaneously.”

Alnajar’s lease for $5,300 a month expires in November, giving him time to keep talking to his landlord. It baffles him why a national chain would want his space; he pointed to water damage on the ceiling and said there’s a competitor, Rite Aid, across the street. His prospects in Harlem remain uncertain. “When you open a new business, you just don’t know.”

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