24 November 2009

Greed Makes Landlords Stupid

From the Daily News:

After inflating rent, Brooklyn landlords find storefront empty during sour economic times


After almost 25 years of running their Cobble Hill dry cleaners, Kyung Dong Oh and his wife Kyung Ja Oh closed the doors for good in March of last year.

The landlord wanted to hike the rent for Trusting Cleaners from $2,500 to $6,500 a month, and the Ohs couldn't afford it.

"It was hard," said Kyung Dong Oh, an immigrant from South Korea who opened the shop in 1984, and saw it become a beloved neighborhood fixture. "My store was not only a store, it was a meeting place."

Twenty months later, the space on the corner of Court and Baltic Sts. still sits empty. [The] Landlord... is still asking $6,500 for the space - and no one has bitten.

It's one of several cases around the borough where landlords saw gold during boom times and shed longtime tenants by raising rents, only to see their storefronts sit empty as the economy turned sour.

"We asked them to compromise," said Kyung Dong Oh, who gathered more than 1,000 signatures from customers to try to save the store, and offered to pay up to $5,000. "He said no, [that] many people are waiting on the line to get a $6,500 lease."

Jonathan Bowles, director of the Center for an Urban Future, said many borough landlords gambled and lost, leaving vacant storefronts where thriving, if less lucrative, businesses once operated.

"For years, they were able to replace old time tenants that were paying lower rents with newer entrepreneurs, people that were opening boutiques or high-end restaurants or spas that were willing to pay two or three times as much in rent," he said.

On Flatbush Ave. in Park Slope, Royal Video moved out of the space it had occupied for 20 years when landlord Lena Fang jacked up the rent two years ago.

"It was just too much," said owner Michael Gidiuli. "It didn't make sense for us anymore."

Royal Video has settled into smaller digs a few blocks down Flatbush, but its old space still stands vacant.

A source said Fang, who could not be reached for comment, is demanding $10,000 for the space and won't let it go for less.

"It's a real shock to these landlords to have to accept something lower at this point, but they better get used to it," Bowles said.

Jay Javed got the boot from his Remsen St. shop, Photoreal, in 2007, when new owners Clinton Realty Holdings announced plans to turn the building into high-end condos.

That never happened - and Javed still walks by his boarded up storefront every day to get to a stall he now rents in the back of a graphics shop down the street.

"I begged them," said Javed, who said business is down by half since he lost his own storefront. "I was so heartbroken."

"Every day I see my store, feel my store, touch my store," he said. "It's just sitting there....They're all empty. Now it's nothing."

Even in the midst of the economic downturn, some landlords are still looking to trade up from low-paying tenants - but keeping their expectations in check.

[The landlord] opted not to renew the lease for Roberto's Shoe Repair, a long-time tenant on Myrtle Ave. in Fort Greene paying $1,200 a month. The store has been empty since September.

"We're not shooting for the moon. We're trying to get a reasonable market rent, and he couldn't afford that," said broker Michael Prince.

"It's always a challenge to get [a new tenant]. It was easier a couple of years ago than it is today," said Prince, who cut his asking price from $3,900 to $3,595 and predicted the space won't stay vacant for long.

Miguel Morocho, owner of the shoe repair shop, who found a cheaper spot further down Myrtle Ave. in Bedford-Stuyvesant, wasn't so sure. "It's crazy," he said. "The rent is too much money. ... The store is empty. Nobody wants to take it."

NOTE: I have been informed by two landlords mentioned in this article that the Daily News has named the wrong man as the landlord of the Court Street building that held Trusting Cleaners and Roberto's Shoe Repair. In light of this, I have eliminated their names from the News article. C'mon, News! Papers are supposed to be more accuarate than blogs, right?

1 comment:

Ed said...

Are you sure its greed that makes landlords stupid, and not the other way around?

I've read that there is some provision in the state tax code that does effectively wind up subsidizing empty store fronts. I wish someone with some knowledge of these things could confirm or rebuke this. It would be pretty alarming if it were true.