Can Neighborhood-Friendly Businesses Survive in Tribeca?
The popular deli New Fancy Foods said goodbye to Tribeca last year after its building at 351 Broadway was purchased by a developer and slated for demolition. Photo: Carl Glassman/Tribeca Trib
For years, warm weather has meant a few tables and some street life outside Ivy’s Bistro on the corner of North Moore and Greenwich streets. But this spring the sidewalk is empty and the restaurant dark and vacant, just as it is across the street at Tribeca Pizzeria, where the last slice was sold on April 26. And whether it’s the fried eggs and sausages that no longer sizzle on the Imperial Coffee House grill on Church Street or the children who soon will miss the giant mermaid statues on the loading dock of Urban Archeology, on Franklin, many Tribeca residents complain that neighborhood-friendly stores seem to be vanishing before their eyes.
“People come in and say, ‘I’m glad you’re still here because we’re losing a lot of our neighborhood businesses,’” said Yvonne Fox, owner of Dudley’s Paw, a small pet supply shop at 327 Greenwich St. “They are outraged, and worried they will only have banks and nail salons and corporate stores in the neighborhood.”
“They feel like, what can we do?” she added. “We can’t march in the streets.”
That sense of helplessness, mixed with sadness and anger over what appears to be an accelerating loss of small retail businesses in Tribeca, is a pervasive feeling among local residents these days. The ghostly strip of shuttered shops in Independence Plaza on Greenwich Street, where only a Duane Reade and Food Emporium survive, is the most vivid reminder of the change. But whether it is Zoie’s Cafe on Beach Street or the Bubble Lounge on North Moore (both closed) or Basics Plus hardware on Church (going out), no part of the neighborhood seems untouched by the loss.
For those who remember Tribeca 15 or more years ago, when dozens more storefronts stood empty, today’s commerce could, by comparison, be seen as humming. And there are those who believe retail life is still healthy in the neighborhood.
“I see a lot of activity going on and I think that the perception that there are a lot of vacancies is just that, a false perception,” said Max Talpalar, director of Sinvin Realty, a firm that represents the West Broadway space vacated this year by Maslow 6 Wine Store.
But the seeming spate of recent business exits has many residents fearing for the future.
Reasons for the closings, experts say, are varied and complex.
Buildings that are sold and slated for demolition or residential conversion provide no options for longtime store owners who find themselves victims of the neighborhood’s success at attracting wealthy apartment buyers. New Fancy Foods, a popular deli at 351 Broadway, near Leonard Street, had catered to residents and city workers in eastern Tribeca for 20 years. It was one of the stores in a three-building deal that will lead to the tearing down of those buildings, to be replaced by a 19-story residential tower.
“Thank you for last 20 yr lovely TriBeCa,“ says a sign on the deli’s door.
“It’s not my choice,” said Urban Archeology owner Gil Shapiro, whose 20 years at 143 Franklin St., where he occupied all six floors of the building for manufacturing and display, ends in August. “I can stay. I just have to buy the building.”
“He’ll probably get 150 million,” Shapiro said of his landlord. “I don’t know what he’s going to do. I mean, God bless him.”
Big rent increases, of course, are often cited as the culprit when a local business has to go. Indeed, rents have soared citywide over the past 15 years. But for a neighborhood with sparse foot traffic compared to nearby commercial districts such as Soho and Greenwich Village, the rent expectations of landlords seem to many to be out of sync with local reality. Some spaces remain empty for months and even years.
By the summer, Tracy Gill and Simeon Lagodich will have to vacate their Reade Street antique frame business, Gill & Lagodich Fine Period Frame Gallery, where the rent, they said, is being tripled, from $12,000 a month to $36,000.
“I walk a fine line between thinking, ‘Oh, poor me,’ and why shouldn’t my landlord make money if we’re were paying below market,” Gill said. “But we were never offered anything reasonable. He didn’t say, ‘You’re going from $12,000 to $16,000.’”
“It’s bonkers,” said Lagodich. “A broker told me that spaces like the ones across the street are 25 [thousand dollars a month] now. “Meanwhile, there are like 10 places for rent a block from here and more places are going out.”
One day before he would shutter his Tribeca Pizzeria, Steve (he did not want his last name in print) was seated in the store’s dining area, his mind, he said, filled with the tasks that lay ahead: collecting on overdue accounts, returning a rented ice maker, getting ready for the auction of the store’s contents. His was the last of the six Vornado Realty Trust-owned storefronts in Independence Plaza to close and he had long since come to terms, he said, with the store’s fate. Vornado’s purchase of the properties two years ago had sealed it.
Steve recalled that the Vornado agent “felt ridiculous and stupid” to suggest what it would cost him to stay.
“She knew that would be impossible for this kind of business to pay that,” said Steve, who opened the pizzeria 20 years ago this month. “I’d guess it would be maybe 60 grand a month. Legitimately, it’s worth $30,000 or $35,000, and that would still be too much for me.”
(According to a knowledgeable source, Vornado Realty Trust has vacated its stores as part of a plan to enlarge the spaces by extending them outward to the Independence Plaza building line, an area now apparently defined by an overhang in front of the stores. A spokeswoman for the company did not return a request for comment.)
Experts say that Vornado and other landlords, especially those with newly purchased properties, are willing to keep their spaces vacant for months in hopes of attracting dream “credit tenants” as they are called, such as banks and chain stores.
Some of them don’t have a choice, according to Stephen Corelli, an architect who has long owned (now debt-free) two retail spaces on North Moore Street, including one that houses the new Nexxus salon, owned by the giant Unilever.
Owners borrow money based on the expectation of “enhanced” cash flows, Corelli said. “If they don’t get those rents, either their lender has the ability to nix the deal or they face the prospect of not having enough income to service the debt because they paid so much for the property.”
“I wouldn’t be surprised if you started to see some defaults because of that,” he added.
As for owners like himself, whose properties have increased “significantly” in value in the last five years, “it’s a boon,” Corelli said, but one that comes with concerns for those who also live in the area.
“What people are worried about is how the neighborhood is going to evolve,” he said. “We came to Tribeca because of certain wonderful qualities. You get a little bit worried that there will be a sameness.”
Peter Braus, a Tribeca resident and managing principal in the commercial brokerage firm Lee and Associates, characterized the retail market in Tribeca as “too many vacancies chasing too few tenants.”
“There is perception and there’s reality,” said Braus, who in the past has represented properties in the neighborhood. “Landlords are looking at Tribeca as this place with great demographics—high income, high density—and I think the density is lacking.”
With some exceptions, Tribeca restaurant owners and retailers can’t pay the $200-per-square-foot-and-above rents that many landlords are asking, Braus said, noting that, except for fast food, restaurateurs in the city are unable to pay more than 8 to 10 percent of their revenues on rent. For retailers the maximum is 15 percent.
“To see all these empty storefronts, as someone who has lived in Tribeca for 20-plus years, it’s frustrating to me,” Braus said. “If there’s a lot of space on the market you either need to adjust your expectations so that you meet the reality of what people can pay or you have to be prepared to sit until the market meets your expectations.”
Residents were stunned when The Harrison, a popular restaurant at the corner of Greenwich and Harrison streets, had to close late last year, the result of what a knowledgeable source estimated to be a nearly fourfold increase over the restaurant’s first lease, signed in 2001. (Owner Jimmy Bradley could not be immediately reached for comment.) But it was not long before Maison Keyser, a French boulangerie with a chain of stores in more than 20 countries and seven in Manhattan, took the space at what is said to be an eye-popping $220 per square foot.
(A Trib analysis of Tribeca ground-floor rents in 2000 showed a range of about $30 to a high of $75 per square foot.)
It is deals like that, experts say, that tempt other landlords to hold out for big-name tenants who can pay such high rents.
“If spaces remain unleased for six or 12 months then owners start to panic. One person would drop the rent and everyone drops the rent,” said a major developer and longtime Tribeca resident who asked not to be identified. “But if a couple of deals get done then people are going to feel more confident in their position and to hold out as long as they can.”
“Unfortunately for the neighborhood,” he added.
The storefront owners who, historically, have most cared about maintaining longtime, neighborhood-friendly tenants are the “accidental landlords,” as they are sometimes called. They own ground-floor spaces in the buildings where they live, often by virtue of having pioneered their homes years ago.
“We’re not the same as the real estate guys around here,” said one of those residents who, with several of his neighbors and former neighbors, owns ground-floor property in a building that is located in a particularly desirable part of Tribeca.
The resident, who asked not to be identified, said that the “lousy little space” owned by his group was recently valued at $8 million, which presents what he termed “not quite a moral crisis, but borderline” as people are “coming out of the woodwork” to buy it.
“When somebody starts offering millions and millions of dollars, and you always knew this was going to be your nest egg, you’re going to try to make the most of it,” said the owner, whose friendly relationship with his downstairs tenants goes back many years.
“But at the same time,” he added, “we’re going to do what we can to not spoil what we have here.”