Crisis in Small Retail: Hot topic addressed at Brooklyn Chamber forum
In parts of Brooklyn there’s a crisis in small retail which is so vital to the community it serves. Led by Carlo Scissura, the Brooklyn Chamber of Commerce (BCC) addressed this issue at the forum on Friday. Businesses on some of Brooklyn’s most notable retail corridors – Smith Street, Montague Street and 7 th Avenue, to name a few — have struggled to stay open. These areas have experienced a high business turnover rate and have been plagued by vacant storefronts.
In response to this growing problem, the BCC assembled a panel of experts who shared their insights and advice on this pressing issue and discussed practical solutions. Carlo A. Scissura, president and CEO of the BCC was moderator, and welcomed Councilmember Brad Lander, District 39; Larisa Ortiz, principal of Larisa Ortiz Associates; and Tim King, managing partner of CPEX Real Estate.
Scissura opened the roundtable by saying, “This is really a very passionate issue for everyone in the room, and I’ve talked about this issue with everyone on the panel.” He explained how driving down Smith Street and seeing all the vacant store fronts made him decide “right then and there to have a panel discussion about this issue — why is it happening, what is going on out there?”
Scissura added that a retail report revealed that Brooklyn has lost $6 billion dollars in “leakage” — retail stores leaving and people taking their money out of the borough to spend elsewhere. Scissura expressed his belief that nobody likes to talk about high rents, but that it is an issue. He paid homage to small business owners saying “they were trailblazers, but when the trail was blazed, their rent went up and they were forced out.”
Lander expressed his belief that in a time of rapidly escalating rent increases, we need to do more to keep the small businesses open. He voiced his dismay at the notion of landlords keeping their stores vacant while holding out for higher rents. He said, “We are at a moment when we need new tools to preserve and strengthen local mom and pop retail stores.”
Ortiz explained that she has focused on a decade-long study of commercial revitalization. She listed four important findings from her study:
A business lives or dies based on the people who walk in the front door
Rent is generated by sales
Different kinds of businesses have different capacities to pay rent
Our commercial districts are at a rent disadvantage — everyone is aiming for the same high rent — some landlords thinking that with a few months of store vacancy they will get it
King discussed studies his company CPEX has undertaken regarding retail corridors and the range of rents charged. He said that if you exclude Manhattan, Brooklyn has three of the top 10 highest rent districts in the city. He further explained that it was all about supply and demand, “every retail location and every retail store is like a snowflake — they’re all different, so saying rent is too high is too simplistic a thought. Some people go into retail without thinking it through. For example, cooking cupcakes in your kitchen is different than selling them in a retail store.” King finished by adding that landlords are realistic and they prefer banks and drug stores because they can pay higher rents.
Lander explained that maybe we should restrict the number of banks and drugstores in certain areas. “It’s not in our best interest to see longtime, much-loved tenants pushed out due to higher rents. If we want long-term tenants to stay, maybe we need regulatory tools to achieve this,” he said.
An audience member suggested possibly offering a tax credit to small businesses as an incentive. Lander responded that he would certainly prefer incentives rather than regulatory measures.
Scissura ended the informative and engaging discussion by suggesting an exit interview might be considered for closing store owners in order to learn exactly why they are shutting their doors and leaving the community.