Yury Pinkhasov of 86th Street Photo says he feels lucky. Though forced to move on short notice from the corner of 86th Street and Third Avenue — where he and the previous owner had been for almost 50 years — he’s managed to relocate to a new spot on the block, maintaining his valued customer base.
Not so fortunate were his eight co-tenants, whose stores ranged from a gift shop and a grocery to a hair salon and a men’s clothing store. The shops now stand empty, their windows papered with notices telling customers the lease has been lost. Of the nine vacant storefronts, only Pinkhasov’s has a sign directing customers to the new location.
It’s a pattern that’s being repeated all over New York City. As rents skyrocket, brokers say more and more small service retailers — from locksmiths and hardware stores to florists and liquor stores — are being pushed off main thoroughfares or are closing down completely, due to insurmountable relocation costs. Ground floor retail rents along Manhattan’s major retail corridors climbed 19 percent between March of last year and this year, hitting an average of $329 a square foot, according to the Real Estate Board of New York.
Perhaps nowhere is the displacement more immediately apparent than on the long block of East 86th Street between Lexington and Third avenues — where those nine vacant stores will soon be replaced by big box retailers.
At 86th and Lexington, Barnes & Noble booksellers and fashion sportswear giant H & M recently signed leases for a total of 86,000 square feet at the Extell Development Company’s planned new apartment-retail project. One block east, on the corner of 86th Street and Third Avenue, the Related Companies and its partners are developing a condominium complex that will include about 25,000 feet of retail space.
Extell’s retail broker, Gary Trock, who is a senior vice president at CB Richard Ellis, confirms rents northward of $325 a square foot. Meanwhile, lower profile retailers are reportedly agreeing to lease terms upward of $400 a square foot.
It’s a considerable increase for a neighborhood accustomed to rents below $200, but Patrick Breslin, president of GVA Williams Retail Group, says small retailers are still better off staying on the Upper East Side, given the West Side’s more limited offerings.
“On the East Side, you have choices from First to Lexington avenues, whereas on the West Side even small spaces are getting too costly,” Breslin says.
Indeed, new projects on Broadway in the upper 90s and low 100s have placed added pressure on rents, notes Gary Schwartzman, an assistant managing director for the retail group at Grubb & Ellis’ New York office.
Schwartzman says he’s been hard-pressed to find a space for his small retail clients and credited 86th Street Photo’s Pinkhasov with reinventing himself in order to make the new location viable.
Pinkhasov, who closed another location in order to carry the increased rent, now offers picture framing and is opening a photo studio in the basement. He also came up with key money needed to buy out the previous tenant.
Said Pinkhasov of the side-street spaces he was offered: “There would have been no business. I knew I would not survive.”
Josh Strauss, managing director at Robert K. Futterman & Associates, says he sees small retailers such as local delis adjusting to the market by upscaling and offering more products.
“Neighborhoods are starting to reinvent themselves, so I think there are positive aspects to this phenomenon,” he says.
Schwartzman relocated another small retailer to the West Side but painted a more gloomy forecast for the area owing to looming increases stemming from development proposals at Park West Village — a Robert Moses housing project that includes a seven-building complex stretching from West 97th to West 100th streets.
The two dozen stores that ring the complex along Amsterdam and Columbus avenues were vacated this past October in order to make way for new chain stores and an additional 90,000 square feet of underground retail space to be developed by PWV Acquisitions.
While residents such as Vivian Dee, 80, say they hope for better and more numerous stores, they also expressed concern about loss of atmosphere and escalating prices in what is largely a lower- and middle-income community.
“It would have a different aura,” says Dee of talk about a Starbucks replacing the Central Park Cafe, an establishment in which she and her neighbors often meet.
By contrast, sentiment on the Upper East Side seems to be more accepting.
“Do you remember the Pastrami Queen?” asks Stacy Friedman, who has lived in the East 90s for nearly 15 years and can recite a litany of closed-down or moved mom-and-pop stores she misses. “It really stinks,” she says, “but the thing about Manhattan is you can always find something similar nearby.”
Well, not exactly. “If the land is zoned for a larger building, then it doesn’t make sense to have a gas station on that property,” Breslin says. “Gas stations were lost on the Upper East Side because of that.”
The next service to be lost will be grocery-related, he suspects. “In a couple of years, neighborhood butcher shops will be a thing of the past,” predicts Breslin.