Local retailers hit hard by recession

Local business in Morningside Heights and Harlem has taken a hit by the year’s economic downturn, and many streets—with boarded up store fronts and fading signs of retail activity—have the scars to prove it.

The recession has tested the limits of the neighborhood’s retailers. With such a wide spectrum of businesses targeting specific, narrow markets, the financial trouble has been selective in its damage. While some mainstays have weathered the storm, others have not survived increased rents and decreased patronage.

Local eateries, densely situated in this area, have noticeably diminished this year, with the majority of casualties on high-density Broadway.

Since the fall, the neighborhood has waved goodbye to local dining establishments on the avenue, including, from south to north, Tokyo Pop, Royal Kebab & Curry, Subsconscious, Empanada Joe’s, Tomo Sushi and Sake Bar, and Caffé Swish.

Except for Caffé Swish, which has been replaced by the Japanese restaurant Vine, these closed-down businesses have left behind persisting retail vacancies.

These repeated cases are part of a larger trend in which Broadway rents have forced storeowners to charge high prices that locals are unwilling to pay, especially for foods like $9 futomaki sushi or a $3 bite-size rojo pulled pork empanada.

“They’ve tried very hard, but they couldn’t make it,” said Frank Brcha, manager of Famous Famiglia pizzeria next door to what was once Empanada Joe’s, whose sign continues to falsely advertise 3 months after it permanently closed its doors.

Max Tierno, a previous Tokyo Pop waiter, said the January closing was largely due to “the owner getting really cheap and cutting the menu in half and raising prices.”

But the past year also proved that sometimes salvation lies one avenue east, on Amsterdam Avenue. Cheaper rents, despite less foot traffic, can allow failed Broadway businesses to turn a profit. Royal Kabab & Curry lost their lease in January, but found a new, more affordable home on 105th Street and Amsterdam.

The academic year closed with one final retail casualty. Morningside Bookshop, an independent, family-owned business on 114th Street, announced early in May that after a five-year run, it will be permanently shut its doors this June. Owner Peter Soter said the closing has become financially inevitable. “I am completely broke, honestly,” Soter said.

While these restaurants and businesses struggled, a few thriving family businesses reported high enough returns to keep their doors open despite generally fewer customers.

Some of these strongholds, such as Hungarian Pastry Shop, Mondel Chocolates, Symposium, Tom’s Restaurant, and V&T Pizzeria, have weathered economic storm in the past and this year was no exception.

Still, stretches of storefront vacancies both west and east of Morningside Park remain. South of 110th Street on Broadway has looked particularly grim. The spaces at 2628 Broadway, between 99th and 100th streets, and across the street at 2625 total 21,263 square feet of unused property on one block. This area is at the center of many streets that continue to sport on average one to two vacancies per block.

Brokers and building owners agreed that viable businesses have feared signing a lease in this time of uncertainty. “We keep having issues with leases billing out,” said Elliott Dweck, a broker for Besen Retail, who represents two empty spaces between 100th and 101st streets, said.

“We’ve had a few good leads, but there are always problems, sometimes with the tenants’ credit,” Dweck said. “You need money to make money.”

The story runs parallel on West Harlem’s 8th Avenue. This area, impacted by a larger trend of upcoming development and gentrification, remains mixed with closings and new vacant spaces that have never had any retail tenants since their recent construction.

“It is hard to run a business when you are paying $4,000 for rent, $7,000 for labor and $1400 for electricity,” Saif Almari, manager of the Wise 99-Cent Discount Store on 114th Street and 8th Avenue, said. “With so few stores around here, there is no point.”

Meanwhile, some landlords have expressed they have no immediate financial need to fill their spaces.

“It is not a financial burden,” local building owner Harut Saganda said. “I own the whole building and have tenants paying rent. I could rent it out tomorrow if we wanted to be flexible and lower the price. But there is no need.” Saganda owns an empty retail space on 120th Street.

In spite of the growing number of unused spaces hidden by newspaper-covered windows, there are a few signs of hope for the entire area’s retail.

From 97th Street to 100th Street, the Columbus Village Development—near its completion after three years of construction—is set to bring in a whole slew of new retail, ranging from big-box chains such as Whole Foods Market and Borders, as well as smaller businesses like Crumbs Bake Shop and Michael’s Arts & Craft Store to an area that has been lifeless for around four years.

Still, this large influx of retail timed with the recession has raised concerns. “We began in a different economic climate, financing was much more readily available and everyone had a rosier outlook,” Columbus Village developer Peter Rosenberg of Stellar Management, said.

Meanwhile, the landmark Metro Theater space on Broadway between 99th and 100th streets will also become home to a chain outlet. Urban Outfitters signed a 20-year lease in January, and the popular store scheduled to open there within seven to eight months. Commercial tenants hope that it will recharge this area, now defined by its vacancies.

As a legislative boost to the retail slump, New York City Council member Robert Jackson, who represents Morningside Heights, recently proposed the Small Business Survival Act, alongside 18 co-sponsors. Jackson said he expects the bill, which would grant commercial tenants additional rights during the lease renewal process, to move forward in September.

Since March, there have also been ongoing local discussions about the allocation of stimulus funding around the neighborhood. Congressman Charles Rangel, who represents Upper Manhattan, said in a letter supplementing the release of a stimulus resource guide that billions of dollars will be used to support the area’s businesses.

Rangel is also proposing a federal bill to provide tax incentives to communities and entrepreneurs to help them spur economic activity.

In his letter, Rangel characterized the severity of the situation, while adding a hint of optimism. “We are faced with the worst economic crisis since the Great Depression,” though he added of the stimulus, “Help is on the way.”