
Bleecker Street’s Swerve from Luxe Shops to Vacant Stores - smacktoward
https://www.nytimes.com/2017/05/31/fashion/bleecker-street-shopping-empty-storefronts.html?_r=2
======
deathhand
What this truly shows is that landlords have too much money. They are able to
sit on their non performing asset keeping prices inflated. Call me a socialist
but I think this shows that the effective real estate tax rate is too low for
some commercial properties.

~~~
Eridrus
I don't think this is that landlords have too much money.

Commercial leases are typically quite long; 10 years is quoted in the article.

Landlords don't want to be locked into a price for 10 years that could be a
momentary downturn.

When you look at it at these time horizons, being vacant for 1 year and
renting for your asking price is as good as giving someone a 10% discount to
start a lease today.

I do think there should be a blight tax though to encourage real estate
developers to find a short term use for the space.

~~~
robbyt
There are plenty of business in NYC that would be very happy to have an
affordable lease on that street for even 6 months.

Only big slow companies want long leases, and only big companies can afford
the bloated rent. I don't agree that the root issues is the duration of the
lease.

~~~
Eridrus
Right, but when you say affordable, you probably mean something like a 50%+
discount, which is probably going to be more hassle than it is worth at the
moment.

Not that price anchoring isn't real, and landlords are often shitty, but I
doubt there are plenty of businesses interested in a short term lease for a
10% discount.

"Arleen Bowman Boutique" had a 10 year lease and wasn't exactly a big
business, so I don't think that big businesses are the only ones who want long
leases; I think your comment says more about the desirability of the real
estate that people will deal with imperfect conditions to get a deep discount.

~~~
robbyt
Emperically, a friend's bag company rented space in the LES for 1 month last
December, and broke even on sales. This company is online only, and they
justified the storefront as a marketing opertunity.

The space cost them $18k for the month (which is low, considering the area),
and the only reason they got that price is because a big company backed out on
their pop-up store deal.

~~~
Eridrus
I think that's great; I think we should be incentivizing that sort of thing,
but I'm sure you can imagine real estate companies are probably not angling to
work on 18k deals that have only a marginal impact and distract them from
trying to find someone who wants a 10 year multi-million dollar lease.

Not because they have too much money, but because these tiny deals are
probably a worse deal for them.

The policy responses for "landlords have too much money" and "landlords are
acting rationally by leaving their lots vacant" are quite different.

------
somberi
I own an apartment in the same few blocks that is featured in the article. And
I have lived in NYC for many years (In fact I know the stores from 1990s that
are written with forlorn). Yes that stretch of Bleecker had gone fancy and now
empty. But there are stores around Bleecker that are from Bob Dylan days that
still thrive. Mamoun's Falafel, Bleecker Street Pizza, Porto Rico Coffee etc.
Even the newer food stalls are very affordable and you can get a meal for $8
(Turkiss, Thelawala, etc). Some of the leather shops from early 80s are still
around. If someone from 1980s were teleported to today's Bleecker Street, they
still have stores they used to go to. An d if I were to bet, they would
acknowledge that Bleecker was in a state of flux even then. Old anchoring, but
making way for the new, but largely still remaining "Bleecker".

~~~
kartan
> If someone from 1980s were teleported to today's Bleecker Street

People from 1980s are still alive. They can take the subway, they don't need
teleportation. ;)

~~~
robbyt
People who were in NYC in the 80s still don't take the subway. They drive
everywhere.

~~~
Nav_Panel
My parents don't mind taking the subway these days. Back then they'd drive,
though, for sure. My dad also had a bike back then, still the fastest way to
get around Brooklyn...

EDIT: my coworker, who lived in the city in the 80s, does in fact take the
subway, but only because it's hard to hail a taxi out in Queens.

------
Tiktaalik
> For many longtime Village residents, what the street is missing is not a
> cool factor but the essential mix of businesses that makes a neighborhood
> function.

These core local businesses unfortunately got priced out a long time ago.

A flaw in our system of real estate is that there doesn't seem to be a very
good mechanism for rewarding the businesses that help increase the value of a
neighbourhood. Businesses put in the sweat equity into creating a great
business that draws people into the area and makes it fertile ground for other
businesses and redevelopment, and their reward is that their rent spikes and
they're forced out.

~~~
minikites
I haven't thought this through particularly thoroughly but perhaps a land
value tax
([https://en.wikipedia.org/wiki/Land_value_tax](https://en.wikipedia.org/wiki/Land_value_tax))
somehow linked to business revenue? For example, if you're selling luxury
goods in a rich neighborhood, your taxes are higher than a bodega in a rich
neighborhood.

~~~
rhapsodic
_> I haven't thought this through particularly thoroughly but perhaps a land
value tax
([https://en.wikipedia.org/wiki/Land_value_tax](https://en.wikipedia.org/wiki/Land_value_tax))
somehow linked to business revenue? For example, if you're selling luxury
goods in a rich neighborhood, your taxes are higher than a bodega in a rich
neighborhood._

Having a tax linked to business revenue is contrary to the spirit of land
value tax.

------
bogomipz
From the article:

>"Indeed, over the past year, Mr. Sietsema, the senior critic at Eater NY, has
watched with mild schadenfreude but greater alarm as his neighborhood has
undergone yet another transformation from a famed retail corridor whose
commercial rents and exclusivity rivaled Rodeo Drive in Beverly Hills, Calif"

I'm not fan of what happened to Bleecker Street but I find it amusing that an
employee of Eater which promotes conspicuous consumption in the food
arena(celebrity chefs, "where to eat now", etc) has "schadenfreude" for
conspicuous consumption in the high-end retail fashion world. There's a slight
bit of hypocrisy in that. Trendy restaurants and trendy fashion boutiques seem
to come to neighborhoods in lockstep. Bridge and tunnel crowds usually come
into the neighborhood to both shop and eat. The metamorphosis of Bleecker
Street seemed to begin with Magnolia Bakery and cupcakes in the early 2000s as
mentioned in the article. And Eater has certainly done its part over the years
in promoting the cult of Magnolia Bakery including pieces by Mr. Sietsema
himself.[1]

For some reason foodie culture seems to view its version of rampant
consumerism as being a more noble pursuit.

Also see the following from Eater:

[https://ny.eater.com/2017/5/18/15504272/west-village-
girls-n...](https://ny.eater.com/2017/5/18/15504272/west-village-girls-night-
out-nyc-ask-eater)

[https://ny.eater.com/2017/5/25/15528706/greenwich-
steakhouse...](https://ny.eater.com/2017/5/25/15528706/greenwich-steakhouse-
eater-advice-column)

[https://ny.eater.com/2016/7/14/12193232/20-years-of-
magnolia...](https://ny.eater.com/2016/7/14/12193232/20-years-of-magnolia-
bakery-a-timeline)

[1] [https://ny.eater.com/2016/7/14/12189132/magnolia-and-
me](https://ny.eater.com/2016/7/14/12189132/magnolia-and-me)

~~~
L_Rahman
Sietsema deserves a bit of a pass here. His Magnolia piece is mostly damning
and he admits some guilt in liking the pudding.

More importantly, he's is one of the biggest champions of non-conspicuous food
consumption in the New York food scene.

~~~
bogomipz
He contributed 800 words and 4 large pictures of food porn as publicity for
Magnolia Bakery. I would hardly call that a "damning" action. He's done his
share to promote them more than once over the years as well.[1]

Here is a list of his Eater articles fetishizing things like donuts, Croque
Monsieurs and porridge as well as articles with titles such as "How to eat
like Anothony Bourdain, "How to do a Pho Tour" and "Where to get the Best Dim
Sum."[2]

Can you explain why you don't believe such articles promote conspicuous
consumption?

[1] [https://www.villagevoice.com/2011/01/28/cops-love-
magnolia-b...](https://www.villagevoice.com/2011/01/28/cops-love-magnolia-
bakery-too/)

[2] [https://ny.eater.com/authors/robert-
sietsema](https://ny.eater.com/authors/robert-sietsema)

~~~
baseten
hey, a guy's gotta eat.

~~~
bogomipz
Agreed :)

And that's the difference between ordering a bowl of Pho and "Taking a Pho
tour" or simply grabbing a slice of pizza from your corner joint instead of
trying to "Eat like Anthony Bourdain"

------
gorkemyurt
San Francisco commercial corridors do not allow chain retailers as a measure
to preserve neigboorhood character. As a side effect this somewhat keeps the
rent down. One of the few examples where over regulating a market kind of
works well..

~~~
Eridrus
A broken clock is right twice a day.

Chipotle wanted to open a restaurant in the Lower Haight right next to the
MUNI station; it got voted down, and it was no particular loss to me since the
Mexican restaurants around there were far better anyway, but that location was
empty when I moved there and only now, 6 years after the original business
closed is it being torn down to build apartments.

And I don't think anyone is claiming commercial rents in SF are cheap; the
best you could say is "maybe it would be worse if we removed this one rule and
kept all the others"

~~~
michaelleslie
A similar thing recently happened when Blue Bottle wanted to open where Bean
There used to be on Steiner at Waller.

[http://sfist.com/2017/05/15/blue_bottle_blocked_from_opening...](http://sfist.com/2017/05/15/blue_bottle_blocked_from_opening_in.php)

~~~
Eridrus
Well that sucks, that area desperately needed some better coffee IMO.

------
minikites
Some municipalities have enacted a "blight tax" as an incentive to keep
property owners from letting their buildings physically decay, maybe something
similar regarding vacant property could be enacted to discourage the "waiting
game" described in the article?

~~~
Applejinx
I wonder if that might be considered a crime against capital, in the sense of
'conspiring to attack value of property'?

Clearly this is a stage beyond 'rich people buying up lots of home properties
to keep vacant as an investment while many go homeless'. Now it's commercial
properties being treated as this sort of 'crystallized value' and kept in
stasis. I expect this to continue. Unused pristine property in key locations
ought to hold more value than using it for sub-optimal purposes (I'm voicing
the view of capital here, I don't personally hold to this belief)

If crimes against capital become a thing, could they merit the death penalty?
Then a human daring to cross accumulations of capital far beyond what any
human's existence could represent, could be put to death for committing a
capital capital crime :)

~~~
draw_down
Good lord

~~~
closeparen
Leftists will also defend keeping vacant lots vacant, due to the possibility
that their development would cause gentrification, or that they should be
banked for some unspecified future date when the money is found to build
public housing.

It seems that both the most cynical capitalists and the most bleeding-heart
leftists value abandonment above all other uses of urban property, and the
world is increasingly split between them. The future is not looking good.

------
abandonliberty
Some lucky landlords are likely trapped.

When the rent went up 6-10 fold, they could refinance and borrow against the
new inflated equity to secure more investments. Renting out at a substantially
lower value would negatively impact this financing.

It's a better deal for them to sit empty at a potential rent of 35K/mo than it
is to lower the rent and have to repay/refinance loans.

~~~
ryanwaggoner
Are you sure that's how CRE lending works? It's definitely not how residential
investment loans work. There's no mechanism for a lender to periodically check
your leases and decide that they're going to call your loan because you're
charging less. And if there was, why wouldn't they be terrified that you're
charging $0?

~~~
dmurray
I've heard a similar story in Ireland, when the bank had already repossessed a
property. If they rented it out, they would have to mark down the asset value
on their books. If they left it vacant, well, some vacancy rate is expected,
so keep marking it to the last price it rented for.

------
L_Rahman
New York has always been expensive, but retailers over indexing on physical
locations both on Bleecker and uptown on Madison and Fifth Avenues took prices
to truly unsustainable levels.

I'm looking forward to a cool off in the CRE space and a slightly smaller one
in the residential space.

~~~
thrownblown
au contraire mon frère, back in the 90's you could buy a whole tenement
building for a dollar[0][1]

[0][https://en.wikipedia.org/wiki/ABC_No_Rio#Recent_legal_strugg...](https://en.wikipedia.org/wiki/ABC_No_Rio#Recent_legal_struggles)
[1][https://en.wikipedia.org/wiki/C-Squat#Founding](https://en.wikipedia.org/wiki/C-Squat#Founding)

~~~
L_Rahman
I'm a child of the 90s so I hope you'll accept my apology for looking at this
problem through a rather narrow lens :)

Trying to widen it by reading Caro's Power Broker and Jacobs's Life and Death
of American Cities.

------
cletus
I live near this area but only since 2010 so don't have the same history many
others do.

That being said, I've never really understood the area of the West Village
west of Seventh. As far as high end fashion stores go, Meatpacking for awhile
a bit of a reputation for this but really it seemed to me that if you wanted
this kind of fashion, that was what SoHo was all about (on Prince and Spring
streets primarily).

Could it be that fashion has simply moved there? Was SoHo as big for this 10,
20, 40 years ago as it is now? This I don't know.

The areas of Manhattan aren't static, this much I know. Over the years the
commercial heart, now in Midtown, has been drifting north (we're talking over
200+ years).

Now this part of the West Village does have reasonable proximity to what was
the Fashion District (above 23rd). Could it be that the end of that textile
industry is responsible for the shift?

Come to think of it, the restaurant culture downtown has probably been
drifting east. Like I compare what's in the West village and food-wise at
least the East Village is so much better. The West Village seems far more of a
sleepy residential neighbourhood now in comparison.

Also remember that Williamsburg just across the East River has boomed in
recent years, probably as people get priced out of the East Village.

So maybe that's it: people are simply priced out of the West Village?

I knew an Israeli guy at work who told me about gentrification in Tel Aviv.
There's apparently some popular neighbourhood that's dead now as it's super
expensive and the rich who buy there don't live there so it's dead. That's
just what he said.

I come from Perth, Western Australia and can tell you that the lively areas of
the city 20+ years ago have really changed. Northbridge is still there and
still seedy. But Subiaco, once a lively cafe strip at nightspot, is now pretty
dead.

Gentrification seems to be a bit like algae. It thrives on the "oxygen" of
what makes these areas popular to begin with but ends up starving everything
else out then itself.

~~~
technofiend
>Gentrification seems to be a bit like algae. It thrives on the "oxygen" of
what makes these areas popular to begin with but ends up starving everything
else out then itself.

Perfect description of Austin, TX today versus say 1965-1990.

------
mxuribe
I recently took a staycation in NYC, and immediately saw what this article
referenced.

Living so close to NYC all my life, growing up I'd often visit the Village;
and Bleecker street was always on the list of destinations without hesitation.
Admittedly, this was decades ago. But, when i visited the Village earlier this
year, it was quite sad. Bleecker and other (normally more active) streets were
so desolate, and their buzzy mixture of bohemia and eccentric stylishness was
lacking. I felt like i was visiting a Disney-ified version of some way-past-
its-prime neighborhood. Sometimes it feels like things have too much shine,
and not enough real, earthy truth.

~~~
ep103
I got a chance to hang out with Immortal Technique some 5 or 6 years ago (very
political, well known rapper). That night we all talked a lot about wealth
inequality, and how it impacts working people int he New York region. He
referred to New York City post-Giuliani as the "Disneylandification of New
York", as the continuing influx of Wall Street capital and increasing wealth
inequality sanitized and built up manhattan and surrounding land at the
expense of people nearby. How it changed the relationships between people and
local communities, and changed the relationship between police and those
communities.

I've always thought that was a really great way to phrase it. Its funny, but
also works on a surprisingly large number of levels, rather intuitively.

~~~
ghaff
The Disneylandification is very frequently applied to the Times Square area in
particular. But it's complicated. Gentrification and, often, homogenization
have their downsides. But 42nd Street, Bryant Park, etc. in the 1970s/80s were
really not all that great.

------
isubkhankulov
this phenonomen is not limited to bleecker st. CRE prices are pretty high
right now, especially in most parts of manhattan.

landlords are happy to let leases expire, jack up the rent and look for the
next 10 yr tenant. usually a 2-3 % annual escalation is added to the lease.

~~~
robbyt
Maybe this is how 1980s NYC will make a comeback.

~~~
abandonliberty
What was that?

~~~
nstj
When there wasn't a Duane Reade or Citibank on every corner! :)

~~~
bradleyjg
I've read that the endless bank branches are partly a result of regulations
that incentivize banks to put branches in low income neighborhoods. Because of
some statistical anomalies, parts of midtown and downtown Manhattan are
considered low income neighborhoods.

[http://www.foxbusiness.com/features/2017/05/18/never-mind-
fe...](http://www.foxbusiness.com/features/2017/05/18/never-mind-ferrari-
showroom-bank-regulators-say-this-poor-neighborhood.html)

(originally printed in the WSJ)

~~~
ghaff
That may be part of it. (Don't know.) But generally speaking I observe that
both bank branches and mobile phone stores seem to occupy vast stretches of
real estate that seem to be out of all proportion to what the businesses can
rationally make effective use of. But I guess it's all part of projecting a
bigger is better image.

The drug chains at least also functionally serve as convenience stores as well
and, in my experience, they do get quite a bit of foot traffic. I actually
find it a bit inconvenient when traveling internationally that this sort of
store doesn't really exist--with the somewhat exception of the UK.

------
jinushaun
I live in the area. West Village is quickly becoming a ghost town. I can't
believe these landlords can afford to sit on empty lots for months and years.
Only well financed businesses can afford to move in, which feeds into the
cycle of boring hyper expensive restaurants.

Also, landlords can't take all the blame since you can't have every business
be a restaurant. Online shopping deserves some of the blame. And the shops
that do exist are just glorified catalogs, the cost of which is probably part
of the companies' marketing expense. Thus, only big name luxury retailers can
afford to rent these spaces.

As for the article, I think they called it: high rent blight. Late stage
gentrification. This is what happens when even the rich can't afford to be
there. The neighborhood needs a reset.

------
nstj
Call it the Amazon effect - who wants to go to SOHO to buy clothes when you
can do it online! :)

Edit: adding quote from the original article -

> At a time when shoppers are buying online and fashion brands across the
> industry are hurting, “the challenging business environment makes it less
> interesting to do vanity locations,”

Same phenomena seems to be happening to prime retail locations globally - take
a drive down Oxford St in Sydney for example. Interested in what the solution
is to clear the market on all this CRE, you can see a lot of startup/coworking
spaces taking advantage of the vacancies in these initial stages.

~~~
potatolicious
I feel like you're mischaracterizing the phenomenon, at least when it comes to
NYC.

This is not a product of falling demand - but rather rising prices, and
landowners willing to endure extensive vacancies to prevent the market price
from dropping.

Increased interest in the area raised prices past the point of affordability
for businesses. In a normal market this would result in price drops until
landlords can find renters.

What we are seeing instead is a concerted effort to maintain pricing through
willingness to let storefront sit empty. Instead of lowering rents to attract
tenants, landlords are simply tolerating vacancies.

> _" who wants to go to SOHO to buy clothes when you can do it online!"_

Bleecker St was home to high end fashion boutiques - a segment of retail that
is still doing well in brick and mortar, and more resistant than other retail
niches to the effects of ecommerce. The idea that everyone went online instead
I don't think holds water.

Importantly also, even if clothiers are increasingly online, other types of
retail businesses (food? Fitness?) would step in to fill these spaces. This
hasn't happened.

> _" you can see a lot of startup/coworking spaces taking advantage of the
> vacancies in these initial stages."_

This is precisely what isn't happening. Rents are too high for broad
categories of businesses (including coworking spaces) - but rather than lower
rents and get these spaces rented, landlords are holding firm instead.

~~~
nstj
I was actually just paraphrasing the article when it came to falling demand
(though I share the same view):

> At a time when shoppers are buying online and fashion brands across the
> industry are hurting, “the challenging business environment makes it less
> interesting to do vanity locations,”

I think it would be folly to think that there's a static or growing level of
demand in physical retail relative to online shopping - even at the high end.

I don't reasonably doubt that someone will be able to turn a profit with the
increased rents, or that landlords don't want to drop the rent for a multitude
of reasons (financing requirements included) but my point is that we're in a
period where the sectors which typically could afford the high rents in places
like these now can't.

And my statement holds just as much for NYC as it does for other cities in the
world - I was simply providing the Australian example as support. Remember
when Virgin could afford renting half of Union Square to sell physical music?
After it was empty for a while (much like Bleecker St) the DR and banks
stepped in with a business which could afford the rent.

