A new report by the Real Estate Board of New York (REBNY) reaffirms the widely recognized state of Manhattan retail rents: that they are continuing to fall along 15 of the 17 retail corridors surveyed for the report. But it also includes a statement from REBNY that the way to correct this is with time and organically shifting lease structures, not through outsized intervention.
This statement is directly in opposition to a potential City Council proposal on commercial rent control, known as the Small Business Jobs Survival Act. Introduced in 1986 and drafted with the goal of protecting small businesses from rising rents, the bill would prevent a landlord from evicting a tenant wanting to renew his or her lease but disagreeing with the newly proposed rent. Instead, it would require an appraisal process to encourage a rent agreement between the two parties.
The proposal has become a controversial topic, as — in its current form — it would provide protections for both independent stores and large corporate chains. Its advocates largely acknowledge that the legislation isn’t perfect but emphasize the importance of supporting the city’s historical and beloved neighborhood stores. However, the detractors suggest that these protections would stifle innovation and protect businesses that perhaps should not remain due to lack of patronage.
Watch on FN
REBNY has previously asserted its opposition to the bill, and this report echoes that sentiment. Although the report asserts that this period has the highest number of corridors in decline since the first survey in 2000, it also argues that this is a natural correction of retail rents that has been taking place since 2015.
“The ongoing shifts in retail asking rents and lease structures in Manhattan have been a byproduct of a natural fluctuation in the market as well as a changing retail industry,” said John H. Banks, president of REBNY. “These changes will resolve hurdles faced by brick-and-mortar retailers, but time is required for this process to continue. When markets are allowed to correct naturally without overbearing intervention, they will be more resilient and adaptable in the long run.”
The Small Business Jobs Survival Act is still being discussed following a hearing Oct. 22 to gauge public opinion.
How Sears’ Bankruptcy Could Affect Retail Rents for Everyone
CBRE: U.S. Commercial Real Estate Lending Market Remains Strong
Why One Real Estate Firm Is Boosting Its Presence in Ireland