Along Ninth Avenue where Chelsea meets the Meatpacking District, owners of such businesses as Sweet Banana Candy Store, 9th Ave Gift Shop and Chelsea Liquors, along with their patrons, activist allies and local officials, are pushing back against seemingly inexorable trends. Back in November, Morris Moinian’s Fortuna Realty Group bought the building, which is home to these stores as well as a dry cleaners, Chinese takeout, barbershop and check cashing office, for $31.4 million. Now, Fortuna plans to renovate the strip and try to attract higher-end tenants; it has already told Brian Rhee, who's owned Chelsea Liquors for 34 years, that he has to vacate by the end of August.
At the liquor store, on the shelf behind the register next to the Johnnie Walker Red is a photo of a rally held on the sidewalk out front in early May. In the photo, people display handmade signs reading “Save Our Shops.” In addition to trying to hold on to community mainstays, however, some of these agitators are looking more broadly at what can be done to retain the familiar in similar situations citywide.
From tailored zoning regulations to special tax arrangements to bringing back an idea from the 1980s of "commercial rent control," land use analysts are examining the options. State Assemblyman Richard Gottfried, who represents the area, is one who's interested in the potential of commercial rent control. “Just as residential rents can drive people out of the community if they’re not protected by rent stabilization, the same can happen with commercial tenants,” says Gottfried. “A neighborhood can have whole blocks or avenues of stores wiped out in a very short period of time as these come due, because landlords can refuse to renew a lease or insist on any rent they can get without limitation. Without some kind of rent law in place, a landlord needs no excuse for throwing residential or commercial tenants out on the street.”
Sung Soo Kim, founder and president of the Small Business Congress of New York City, a federation of 70 trade organizations, agrees that when it comes to disappearing businesses – whether Coliseum Books or CBGB's – “Rent is the major issue.” Kim says the city averaged 6,000 commercial evictions per year under Mayor David Dinkins; this number jumped to 7,500 per year while Rudy Giuliani was in office, and has soared to more than 10,000 per year under Bloomberg. In 2006, Kim cites data that there were more than 14,000 commercial evictions in the city. While these figures are for commercial evictions, a broader category than small businesses, he’s convinced that the vast majority of the casualties are small businesses.
Moinian, the new owner of the building containing 114 through 124 Ninth Avenue, feels he's been demonized for doing normal real estate business. "I still don't get the fuss about someone paying $2,000 after 20, 30 years," he said of Rhee (who pays $2,400 per month for 850 square feet), when the going rate for an attractive commercial location like that would be more like $6,000 or $8,000 per month. "As a developer, you try to renovate, you try to create value, then you move on," he said.
Moinian says he has not been contacted by elected officials about the situation, and is unaware of any proposals for saving small businesses. "I don't know if that can ever work in a democratic society. It's really above and beyond me," he said. "It's not just one store – it's an issue at large for the country."
Some residents of the Robert Fulton Houses, a public housing complex directly across Ninth Avenue from the stores, wonder where they'll shop once the pricier new tenants arrive. “As you see small businesses being displaced in the community,” says Miguel Acevedo, a member of local Community Board 4 who helped organize the May rally, “you really start to think – even if you live in public housing, you may not be able to afford to live here.” Acevedo leads a group called Fulton Youth of the Future, which works with the more than 2,000 residents of the Fulton Houses. “The scary part is that they tell you they don’t have a place to shop; where do we go to now?”
New York City actually enjoyed commercial rent control as part of the price controls introduced during World War II, and the statute stayed in force until 1963 – though the breadth and depth of its impact are unclear. More recently, former Manhattan borough president Ruth Messinger waged a bitter struggle through much of her tenure on the City Council in the 1980s to pass such a bill.
“‘Commercial rent protection,’ we called it,” recalls Councilwoman Gail Brewer, who now represents the Upper West Side but was Messinger’s chief of staff at the time. (Messinger was traveling abroad and unavailable for comment.) The proposal applied to businesses that occupied fewer than 10,000 square feet, for which it limited rent increases to 45 percent over five years. If tenants and landlords were unable to agree on a new lease within those limits, they would then have been required to enter binding arbitration.
“We definitely need to address this issue,” Brewer says today. “It destroys neighborhoods; it destroys families.” She is focused on the wave of drugstores and banks that have been replacing small, local retail outlets in her district. While some argue that there is little difference between chains (sometimes referred to as formula businesses, given the generic models on which they’re constructed) and local retailers, a growing body of research contradicts such arguments.
When Borders chain bookstore threatened to open a new store in the heart of downtown Austin, Texas, a local consulting firm called Civic Economics produced a study (commissioned by the Austin Independent Business Alliance and another organization called Livable City) that found that for every $100 in sales, Austin’s local businesses were pumping $30 back into the city. In contrast, only $9 of every $100 spent at a proposed Borders would be spent in Austin. A similar study of a Northside Chicago neighborhood by the same firm found that “for every one hundred dollars in sales, the locals generate sixty-eight dollars worth of local economic activity and the chains just forty-three dollars.”