Affordable housing has been one of the most dominant topics in New York City over the past few years, and one City Council member now wants the conversation to include affordable retail as well.
Council member Robert Cornegy, who represents Bedford-Stuyvesant and Crown Heights, told The Real Deal he plans to introduce legislation by the end of the year that would offer developers incentives like tax breaks and additional development rights if they agree to give retailers space in their projects at below market rents. The goal would be to make it easier for smaller stores to find space and stay open in the city.
“Long term, mom and pops can’t afford to stay, no matter what services they provide,” Cornegy said, “so we’re asking for developers not to look at what the current rate or forecasted market rate is, but do below that.”
Cornegy stressed that the city already has similar standards in place for affordable residential units. He specifically cited New York’s FRESH Program as a good point of comparison, which offers companies tax reductions and zoning incentives if they build a grocery store with their projects in areas considered underserved.
Retail is going through some well-publicized struggles these days, with William Macklowe Company head Billy Macklowe infamously characterizing the sector as “f*cked, plain and simple.” Stores throughout New York have been aggressively seeking rent relief from their landlords, and rent vacancies have recently gone up in neighborhoods ranging from Soho to the Upper East Side.
Cornegy has previously worked on retail issues through the city’s Uniform Land Use Review Procedure, recently securing a commitment from SMJ Development that the retail space in their mixed-use project at 1618 Fulton Street will contain four 1,000-square-foot sections, making it better suited to smaller stores.
Juan Barahona, principal of SMJ, said that in the current retail climate, it may make more sense for landlords to at least occasionally target smaller local stores instead of large national chains.
“For developers and landlords to just always presume that we’re going to land a big credit tenant and that the music is just going to keep playing, I think it’s a little naïve,” he said.
“For me, it’s better to get somebody in there paying some rent, even if it’s a slightly discounted rate for what I projected,” he continued, “versus trying to hold out for some big credit tenant that may not ever show up.”