Alcohol is said to be recession-proof. Drinkers are just as likely, if not more likely, to indulge in bad times as they are in good.
But what better way to test how that age-old adage is holding up in New York than by looking at real estate prices for watering holes here during one of the worst recessions in decades?
Unlike most citywide retail rents, which have dipped of late, rents for properties that house the city’s taverns, bars and clubs have for the most part only leveled off, according to brokers who work in the nightlife arena.
“People think there are going to be tremendous bargains out there,” said Gary Auslander of Tower Brokerage, which is based on East 10th Street. “The fact is, lease prices have pretty much remained flat.”
One primary reason for the relatively stable rents is that it has become increasingly difficult to obtain new liquor licenses, which makes them more valuable and drives up both rent and sale prices for the establishments that already have them, according to Auslander and other brokers.
Brokers say this is especially true in Downtown neighborhoods that are attractive to bar owners because they tend to lure the lion’s share of the nightlife crowd — areas such as the Lower East Side, the East Village and Soho.
“You find me a bar for sale Downtown where the rent is fair and it costs around $250,000 to purchase, and I’ll have takers lining up around the block,” said Ken Brandman, the owner of New York Commercial Realty Services.
According to Auslander, the going price for a liquor license alone is about $100,000.
While it has become progressively more difficult to obtain liquor licenses in some city neighborhoods, the number of Manhattan license applications accepted by the New York State Liquor Authority hasn’t dropped off, indicating that the economy isn’t deterring entrepreneurs from opening bars.
Between January 1 and June 10 of this year, 184 standard bar license applications were accepted, compared to 182 during the same period last year and 205 in 2007, according to statistics provided by the state liquor authority to The Real Deal.
Also, with retail lease prices dropping and retail tenants harder to find, landlords who in the past wouldn’t have considered bringing in a bar tenant are now more willing to do so, according to Rob Frischman, president of JDF Realty.
Faye Fisher, the vice president of Advance Restaurant Finance, which works with small and medium-sized merchants, said this year she has given out at least 35 percent more loans to bars than she did last year.
Bars in the city also appear to be more resilient in the down economy than restaurants, with significantly fewer closings over the last few months, according to Amanda Kludt, the editor of Eater.com, a popular Internet blog that monitors openings and closing of bars and restaurants citywide.
And while restaurateurs are trending toward opening eateries with moderately priced menus, high-end club owners remain active, said Kludt.
For example, she said, a new exclusive bar/club called the Gates opened in May in Chelsea. She also pointed out that the owners of the exclusive clubs Oak 1 in Chelsea and Butter in Noho are opening a new spot in the West Village space formerly occupied by the Plumm. In addition, Matt Levine of the Eldridge is spearheading a high-end project called LevantEast at Thor, the restaurant and bar in the Hotel on Rivington on the Lower East Side.
Still, bars that serve beer at inexpensive prices are likely attracting more customers than the high-end places in these economic times, nightlife experts said.
Eric McManus, the owner of Epstein’s Bar on Allen Street in the Lower East Side, said his business is good (note to reader: this reporter earned extra bread tending bar there until last year ).
“In this day and age, people would rather take the hundred dollars they would have spent in one night at a high-end place and spread it over three nights at a place like mine,” McManus said.