The Future of Retail Steven Spinola, President, REBNY New York City Business Improvement District Annual Conference July 13, 2010
Emergence of BIDs
Outlook for Retail
Problems Ahead – More Politics than Economics
The Emergence of BIDs Fulton Street Mall in 1976 began BIDs. Focus on basic services—clean, safe streets.
The Emergence of BIDs Today - 64 BIDs generating $104 million, serving over 3,200 block fronts and 16,000 businesses. Employing over 530 sanitation workers and over 360 security workers. Essential to a vibrant retail corridor.
The Outlook for Retail Economic recovery is beginning. Momentum translating into retail sales growth. National retail sales were 9.24 percent higher in March, 9.77 percent higher in April, and 7.41 percent higher in May than a year ago. NYC retail employment has added 3,200 jobs since the beginning of the year.
The Outlook for Retail
6,800 more people employed in retail in NYC this May than last May. Demand for prime space remains healthy. Outside prime locations demand is weaker. Retail is highly localized.
The Outlook for Retail Average Ground Floor Asking Rents Selected Manhattan Corridors Spring 2010
Major large leases: Aeropostale, Disney in Times Square; Uniqlo on Fifth Avenue
The Outlook for Retail The health of the consumers is key for retail. Recession impact on luxury goods sector. The efforts of the Madison Avenue BID.
The Outlook for Retail Impact on “Mom and Pop” retail. Shortage of working capital and lines of credit. Blame problems incorrectly on rising rent.
The Outlook for Retail Small retail stores success stories: Brentwood Pharmacy new lease on West 8th Street, joining its location on West 14th Street. Lamazou Cheese in Murray Hill opens its first restaurant, a block away from its current shop.
Problems Ahead – More Politics than Economics Unions use legislation to raise the pay and benefit scale of employees, not organizing and negotiation. BIDs and Prevailing Wages Mandating prevailing wages for sanitation and security. Reduce staff and cut services. Bill placed ideological goal above the mission of the BIDs and their benefits for the neighborhood and the city.
Retail Stores in Brooklyn Compared to Long Island
Retail Stores in the Bronx Compared to Long Island
Mandatory Paid Sick Leave 20 or more employees: 9 paid sick days a year Less than 20 employees: 5 paid sick days. Higher costs on small businesses.
Commercial Rent Control Mandates arbitration for lease renewals. Arbitration only binding on landlord. Tenant can stay in the space at a 5 percent increase. Tenant: A right of first refusal.
Commercial Rent Control 1969 NYT article with the headline “High Rents Close ‘Village’ Stores”.
Florence Meat Market – Still in business at the same location
A new fruit and vegetable market has opened on the same block. Francis Typewriter and Television and a second hand book dealer are no longer there - businesses a victim of a changing market.
Landmarking and Retail Stores Proliferation of historic districts. Expansions of the Upper East Side and SoHo. Lease negotiation in a landmarked property. Large national retailers want their trademark marketing. Reluctant to spend money for landmark process.
Landmarking and Retail Stores Small stores can’t pay for the approval process. Small boutique stores often don’t pay a high enough rent. Uniqueness and creativity of Boutiques are desired by residents.
Conclusions New York City can support more retail stores. Must lower operating costs and stop mandating wages and benefits. Strong businesses survive and thrive; weak ones don’t. BIDs create an environment that helps the strong businesses get stronger and gives the weak ones the best chance of success. BIDs are a vital element in the future of retail in NYC.