One-fifth of Montague Street storefronts empty amid COVID crisis
BHA survey gathers info for revitalization of Brooklyn Heights’ ‘Main Street’
Even before COVID-19, Montague Street, the central shopping district in Brooklyn Heights, suffered from a high rate of commercial vacancies and turnover.
Now, amid the pandemic, empty storefronts are proliferating and residents and businesses are urgently calling for answers to the decades-old question of how to revitalize Montague Street. Local residents can help by taking the BHA’s Montague Street survey.
The Brooklyn Eagle’s in-depth report on Montague Street follows.
Montague Street, steeped in history, former home to the Brooklyn Academy of Music, is a unique commercial strip. Only four blocks long, it has a civic center at one end and the Promenade, a popular tourist attraction, at the other.
The unofficial “Main Street” of New York’s first historic district should be a dream location for popular retail stores and restaurants, but the shopping strip has been plagued by vacancies for decades. Now, amid COVID-19, the bottom is falling out.
“I will not easily forget those early weeks of the COVID shutdown when we were going out once a week, and Montague Street was completely deserted,” Erika Belsey Worth, president of the Brooklyn Heights Association, told the Eagle. Worth, an architect, moved to Montague Street with her husband and their two sons in 2001.
“As I walk down the street now, the many darkened storefronts are a reminder of that emptiness, and a warning,” Worth said. “A flourishing Montague Street is important to Brooklyn Heights, and now is a critical time to focus on both bringing it back and making it better.”
With the entire city in crisis, however, can Montague Street be saved? An increasing percentage of people are shopping online, and local businesses have been priced off the street for decades by soaring rents. Even some national chains on the strip have closed their doors.
Familiar shops and restaurants like Peerless Shoe Service, which has been located at 113 Montague St. since 1991, have disappeared. Chocolate Works, Five Guys, the Verizon store, Le Pain Quotidien, Scott J. Aveda Salon, Vegetarian Ginger and B.GOOD restaurants, among others, are gone.
The beloved Teresa’s Restaurant closed in January after 31 years. Roughly 18 storefronts on the street – about a fifth of the total number – are now empty.
One prime retail space, at 112 Montague St., has been unoccupied since 2012, when Starbucks left the site and moved up the street. Nathan Royce Silverstein owns the building, which his father and a partner bought in 1936.
Silverstein told the Eagle in the summer of 2013 that he was waiting for “a national tenant or one with a very good credit rating.” Despite paying more than $100,000 a year in property taxes, according to the NYC Department of Finance, Silverstein has left the site vacant all these years.
Other owners too have made the calculation that they could earn far more money in the long run by leasing their properties to national chains.
This was the case at 146 Montague St., the former home of Boro Photo, a three-generation camera and photo services shop. Boro Photo was operated by Allen Kaufer and his wife Sandra, along with William Hurcomb.
“When Verizon told me the rent they would be willing to pay,” Allen Kaufer told this paper, “I had to admit: I could never make that kind of money in my business. I retired to Florida and let them have the space.”
According to the Real Estate Board of New York, during the first quarter of 2020 (the latest figures available), commercial rent on Montague Street averaged $97 per square foot.
When an area’s property values increase rapidly, its retail properties can enter a cycle of turnover called “high-rent blight,” Tim Wu writes in the New Yorker. Early retailers who brought vitality to the neighborhood find their rents doubling, tripling or quadrupling, and they become victims of their own success.
This describes the trajectory of retail on Montague Street, and more recently Smith Street in Boerum Hill. As businesses’ leases ran out and landlords jacked up prices, many pioneering Smith Street eateries, including Alan Harding’s Patois, Uncle Pho and Pacifico, closed.
In the 1970s, Montague Street was thriving. Its main problems were too many shoppers clogging the sidewalks and not enough parking. By 1986, rents had more than tripled in some cases, forcing out locally owned businesses like Meunier’s gift shop, the Montague Meat Market, two clothing shops, a gift shop, a watch repair shop, a furniture store and several restaurants, according to the New York Times.
Chains with deep pockets, like Burger King, Banana Republic, the GAP, Starbucks and Baskin-Robbins moved in. Landlords hit the jackpot, but many residents worried that the charming character of the street was in danger of being lost.
A fight over a small second-story bookshop illustrates the tensions of the time. When Albin Javarone, former owner of 162 Montague St., raised the rent of the quirky Community Book Store in 1984 from $1,500 to $3,500, heartbroken book lovers formed the Committee to Save Montague Street. They wrote letters, staged rallies and gathered thousands of signatures. An ice cream company that had planned to move into the book store space backed out of the deal.
Javarone sued the ice cream company and the bookshop’s owner, John Scioli, for roughly $43 million. Javarone accused Scioli of “a campaign of terror,” according to the Times.
The ACLU helped Scioli with the lawsuit on freedom of speech grounds. Scioli eventually moved his book store to a building he bought in Cobble Hill (a much cheaper neighborhood at that time), where it remained until he retired in 2016. He sold the building for ten times what he paid for it. Javarone sold 162 Montague St. in 2019 to an LLC for $5.7 million, according to city records.
‘This is not Brooklyn Heights, it’s Amazon Heights’
Tony Bates has operated Bentley’s Shoes at 144 Montague St. for 40 years. In all that time, Bates says he has never seen as fast a turnover of stores as he has in the past ten years.
Bates, who owns the building, says there are several reasons behind the decline of retail on Montague Street. The first is online shopping, he said.
“Shopping online is destroying the small businesses. If you want to get an idea of what’s going on on the street, take a look at the UPS store. Take a picture of the people lined up with their returns. This is not Brooklyn Heights, this is Amazon Heights.”
The second reason behind the street’s decline is property taxes, he said.
“The taxes in New York are very high, particularly in Brooklyn Heights,” he said. “If you look at other neighborhoods like Park Slope or Cobble Hill, which have pretty much the same foot traffic as Brooklyn Heights, their taxes are 60 to 70 percent less.”
Bates said the taxes on his 2,500-square-foot building amount to more than $100,000 a year. “Those taxes are forced to be passed on to the retailers,” he said.
The Eagle confirmed Bates’ claim. Similarly-sized buildings on Seventh Avenue in Park Slope are taxed from a third to a half of the amount typically billed to commercial properties on Montague Street.
For example, a five-story, 3,087-square-foot co-op building at 203 Seventh Ave., housing the Blue Bottle Coffee Shop, pays roughly $38,000 in property taxes. A 2,134-square-foot mixed-use building at 193 Seventh Ave., the home of Tazien Hardware, pays roughly $25,000 a year in property taxes, according to the Department of Finance.
Another reason for the street’s slump is the departure of the Jehovah’s Witnesses from their Brooklyn Heights campus, which brought “a tremendous amount of tourism and dollars into the community, to the streets and to the local merchants,” Bates said, adding that about 15 to 20 percent of his customers had been Jehovah’s Witnesses.
And amid COVID-19, many retailers are not paying rent to their landlords, Bates said. “The city is telling you that they’re not going to evict people renting from you, yet you still have to pay your taxes.”
Bates says he has lost one commercial tenant and one residential tenant due to the pandemic. “We ourselves lost over $250,000 and counting, from business and tenants. Remember, this didn’t just start in March, this started in January.
“Now we have people leaving by droves to move to the suburbs, which further hurts the retailers. And we have no plan from our government officials to combat this,” he said. “Look, just this week. Five Guys gone – everything shut down. Francesca’s in jeopardy – that store is for rent. Lichee Nut’s lease is up soon, they’re gone.” Francesca’s has now closed.
There’s a lot the street can do to improve things, Bates said. “But the problem is, is it the will of the community to come out and support the local businesses? … What keeps us open is we have 40 years of loyalty, and that’s not from the neighborhood. Only ten percent of our business is from the neighborhood. Ninety percent is from people coming into the neighborhood.”
Bates added that it would be “a shot in the arm” if the long-delayed Hotel Bossert (at 98 Montague St.) were to open. “I’ve never seen a hotel that says it’s opening every day for the last five or six years. I don’t understand it.”
The outlook for hotels during the pandemic is not positive, at least in the short run. According to PricewaterhouseCoopers, New York City hotels have recently suffered the largest revenue decline in their history.
Montague Street optometrist Dr. Fred Harris has been with Grand Opticians (now Cohen’s Fashion Optical at Grand Opticians) for roughly four decades. He is also co-owner of the two-story 151 Montague St., where the store has been located since 1990. Prior to 1990, Grand Opticians was located across the street. The business moved when the landlord quadrupled the rent, Harris said. “We couldn’t afford this building, but we got it anyway.”
The street is not what it used to be, Harris said.
“Montague Street was a very special place. It’s a small community, and all the storekeepers knew their customers. You’d go to Montague Street because it was special. The boutiques had different merchandise you couldn’t get anywhere else – well, maybe the Village. There were a lot of shoppers from all over because of its reputation for that,” Harris said. “Then what happened was the rents went crazy, mom-and-pop shops left, they couldn’t afford it, and it became like a mall.
“The vacancies are because the rents are sky high,” Harris continued. “However, they have to be, because the taxes are sky high. It’s unbelievable. I’m partners in this building, which was fantastic at one time. Now, it’s a disaster. We pay close to $130,000 a year [in taxes] for this building, and goes up $10,000 a year, easily. It’s so out of whack. Now you’re not getting the rents, so how are you going to pay taxes?”
Even before the pandemic, Montague Street was troubled financially, Harris said. “Why would people go to Montague Street? There’s nothing that would lure you there. They have to lower the taxes so the landlords can lower the rents. It’s as simple as that.”
While some people have floated the idea of hosting pop-up shops in vacant storefronts, Harris doubts that would do the trick.
“The taxes are so high it just doesn’t pay.”
The florist shop
“Definitely, the rents are way too high,” Estela Johannesen, owner of James Weir Floral Co., who leases the space at 107 Montague St., told the Eagle.
“I understand that the landlords also carry a burden with real estate taxes, which happen to be really high on Montague Street. For years, people have been trying to figure out why the real estate taxes are so much higher on Montague compared to any other street. It’s like a secret formula,” she said.
Johannesen is vice president of the Montague Street Business Improvement District (BID). “Tenants advocate for more promotions to boost business, landlords advocate for hiring a lawyer to figure it out. So we’re all in the same boat. But definitely, yes, rents are too high.”
If the city is to solve the problem, there must be “simultaneous effort and sacrifice not just by the tenants and the landlords but by the city, taxes, mortgages, all this,” she said.
Johannesen feels the area has much to offer businesses if the rent could come down. “We’re close to transit, the courts, the park, Promenade, and the history here. We should try to get younger people who are willing to invest but don’t have the capital.”
Much rests on the willingness of landlords to be flexible, she said.
“Some landlords, yes, right from the beginning they gave off 40 percent on the rent, three months free, April, May, June. But the majority of landlords, when I ask people if they’ve gotten a break, they say no.”
She added, “I rent and no break … Well, he’s a businessman.”
The clothing boutique
Michael Mastriano has owned the high-end Tango women’s boutique at 145 Montague St. for 50 years. He also owns the building, and now his daughter runs the store. Since the pandemic, Tango has included more casual clothing, with prices “a little lower than before,” he told the Eagle.
“Real estate taxes are too high,” he said. “They’ve always been. I pay $120,000 now. That’s why landlords can’t give someone a break. And you can’t even rent now.” Mastriano said he is getting only half his usual rent from tenants since the pandemic hit.
Mastriano said the variety of businesses on Montague Street is poor now. “There’s no major tenant. This used to be the premier shopping district in the whole borough, but now it’s deteriorated.” The strip is also getting more competition from Fulton Street and Court Street, he said. “Seventeen or 18 spaces are empty, and there’s going to be more if business doesn’t pick up.”
A few landlords on the street are thinking about getting out, he said. Others have tried lowering the rent on vacant spaces. The rent was recently decreased for the former Sprint store at 147 Montague St., next door to Tango, which has been vacant seven years, he said. The “For Rent” sign is gone, he noted, and the store is no longer listed on the Kalmon Dolgin real estate website.
Unlike Bates, Mastriano said that the loss of the Jehovah’s Witnesses didn’t affect his business. But he agreed that the Hotel Bossert could help merchants, if it ever opens.
“We’ve been waiting for that hotel for five years now. It could give the street the shot it needs.”
The Brooklyn Heights Association has been trying to figure this out for decades
Montague Street is an issue the Brooklyn Heights Association has been grappling with for decades.
In the ’70s, Montague Street’s problems were crowded sidewalks, overflowing trash cans, lack of greenery and doubled-parked cars. Demand for parking exceeded capacity by 330 spaces. In 1976 a Burger King opened, and BHA requested a study on how to improve the “pedestrian environment.” The study was undertaken by the Brooklyn Office of the Department of City Planning and the Mayor’s Office, with a grant from the National Endowment of the Arts.
The study’s main suggestion was to widen the sidewalks between Clinton and Hicks streets, adding trees, planters and seating areas. Some seating areas would jut out into the street, reducing parking – or eliminating it altogether. Building a municipal parking garage at the current 1 Pierrepont St. site was a possibility, since the city owned the property.
Another suggestion was to close Montague Street to traffic between Clinton and Hicks Street, either completely or from 11 a.m. to 2 p.m. on weekdays, when pedestrian traffic was heaviest. Other ideas included improving trash pickup and installing more attractive signs.
Due to the city’s fiscal problems in the ’70s, none of the major suggestions were implemented. BHA contracted with various organizations to manage the trash. Large, squat planters were installed – and later removed following complaints from merchants.
By the ’80s, Montague Street’s problems had transformed to skyrocketing rents and vacant storefronts.
BHA and Montague merchants tried numerous times over the years to draw the city’s attention to the street’s plight, said Judy Stanton, who was on the BHA board in the early ’80s and served as BHA executive director from 1989 to 2015.
BHA worked with former Manhattan Councilmember Ruth Messinger’s efforts in 1985 to limit rent increases for small businesses. “It never got off the ground,” Stanton said.
Stanton and merchants testified at a 2009 hearing on Retail Diversity and Neighborhood Health, chaired by then-Sen. Daniel Squadron. They also testified at a hearing chaired by then-Councilmember David Yassky’s office. “A lot of people testified,” with no result, Stanton said.
The group also tried to make a case to the city’s Department of Finance for lowering Montague Street’s property taxes. Mayor Bloomberg’s Finance Commissioner, Martha Stark, wouldn’t even meet personally with them, sending a deputy out instead, Stanton said.
“That’s why there were more boutiques in Park Slope,” Stanton said. “It’s not fair. Taxes are tied to the value of real estate, and the prices in Brooklyn Heights were going up.”
In 1998, BHA hired consultants to help form a Business Improvement District.
“We went through two rounds of consultants,” Stanton said. The second one, Carvel Hidlay “Rusty” Moore, had championed many BIDs throughout the city. Moore guided BHA and a core group of merchants through the process to form the BID, which exists today. (Moore died in April of COVID-19 in Croton, New York.)
The Montague Street BID is one of the smallest BIDs in the city, but at last count it served more than 100 businesses, who pay a fee to belong. The BID advocates for the merchants and markets the strip, keeps the area clean and well-maintained and provides the cheerful greenery.
Brigit Pinnell was the executive director of the Montague Street BID from 2011-2015.
“There is no one single explanation for the street’s commercial vacancies, but there are some issues that I saw as having a direct impact,” she told the Eagle via email. “At one point while at the BID, I did a deep dive into commercial property tax. It became clear that the tax burden on small businesses played a direct role on vacancies. Many businesses simply couldn’t make it work with such onerous taxes (or rents that incorporated the tax).
“Another issue is architectural constraints such as available square footage and exterior stairs,” she added.
And if locals want to keep shops on Montague Street, they’re going to have to shop there, she said.
“The vacancies should be a wake-up call to area residents,” Pinnell said. “For local businesses to survive, they must support them. Property owners also play a pivotal role. If they aren’t already, they need to ensure that the businesses they rent to will not only be good tenants, but will be good for the district. A good retail mix is critical to Montague Street’s success.”
Property owners need to work with tenants on the rent
Montague Street “is a very complicated question that has no one definite answer,” Kate Chura, the current executive director of the BID told the Eagle. “Some rents are high and so are the property owners’ taxes.”
“We were working with city officials and city/federal agencies to address the vulnerabilities. Then COVID hit and the courts closed and we now have a new set of challenges,” Chura said. The BID has been working to help connect businesses with resources to deal with the pandemic, she added.
Since COVID-19, “One issue that is very relevant and a make-or-break for small businesses is whether the property owner is willing to work with the business regarding rent. This is the single determining factor,” Chura said.
Chura is also the executive director of the Atlantic Avenue BID. In this capacity, she spoke about a popular local institution that has just been forced to close its doors.
“Building on Bond, that served as a community meeting place for 13 years closed [Sept. 18]. The landlord, Brian Elgart, would not budge,” Chura said.
Building on Bond was located at 112 Bond St. (at Pacific) in Boerum Hill. The cafe-restaurant had been voted “Best Neighborhood Hangout” by New York magazine, and patrons have commented with dismay about its closing on the restaurant’s Facebook page.
“I’ve had seven months to come to grips with it, but my wife is still in tears,” Building on Bond’s owner Phil Morgan told the Eagle. The restaurant “was like our living room where we met all our friends.”
Some restaurants have reached an understanding with their landlords to pay a percentage of their take, say 10 percent, during the pandemic, he said. “If you take in $100,000 you pay $10,000.” But Elgart refused to negotiate, Morgan said.
Elgart, who owns 17 buildings in Brooklyn and Manhattan, disputed Morgan and Chura on the circumstances, claiming in an email that Morgan had wanted out before the pandemic — a claim that Morgan was too upset to even discuss.
On Oct. 1, Councilmember Stephen Levin held a press conference at Building on Bond to push for government help for commercial tenants like Morgan, including commercial rent stabilization – the same idea backed by Councilmember Ruth Messinger in 1985.
State Sen. Brian Kavanagh and Assemblymember Yuh-Line Niou have also introduced bills that would allow the city to launch a “recovery lease” program that would give landlords tax incentives for restructuring leases with commercial tenants.
BHA panel discussion: Maybe a woonerf?
In February, Montague Street’s dilemma was the focus of a panel discussion with city planners and business experts at the BHA’s annual meeting.
Panelists pointed to studies about factors that have affected the city’s vacancy rates, including increasing property taxes and rents, and a jump in supply. Most importantly, the rise of internet shopping has forever changed the face of retail in the city, the panel said. Stores are shifting from selling goods to providing services and food.
When BHA members at the meeting were asked to raise their hand if they ordered items online, almost every hand went up.
Panelists ran through possible solutions, including making vacant storefronts open to cultural pop-ups while awaiting permanent tenants, and connecting the Promenade to Brooklyn Bridge Park to bring more of the park’s visitors to Montague Street. The panel dismissed a bill introduced by Assemblymember Linda Rosenthal that would tax landlords who leave their commercial properties vacant too long, saying it was not appropriate for Montague Street.
Another idea brought up by the panel was turning Montague Street into a Dutch-style “woonerf.” A woonerf is a “living street” where sidewalk curbs are removed and vehicles share the space with pedestrians and cyclists. Cars are forced to drive at pedestrian pace.
BHA executive director Lara Birnback formerly served with the Neighborhood Development Division at NYC Small Business Services. She said the woonerf concept just might work on Montague Street.
“These kinds of streets are found in cities all around the world in both residential and commercial areas. Why not experiment with something like that here in Brooklyn Heights?” she told the Eagle. A woonerf would “prioritize pedestrians over vehicles and open up more space for things like outdoor dining and culture, especially in the warmer months.”
But some merchants, including Bentley’s Shoes’ Tony Bates, fear that closing the street to cars will cut into their business, especially now that coronavirus fears have led many people to drive rather than take mass transit.
BHA says it plans to study the issue further.
“The BHA welcomes a variety of ideas and proposals to revitalize and energize Montague Street for the benefit of local businesses and residents, including consideration of a direct connection with the park,” Birnback said in a statement.
“The BHA has historically done our part,” BHA’s President Worth said. “But we want to work closely with the BID and the community to imagine new ways to bring fresh vitality to Montague Street.”
Retail wish list
Longtime Heights residents say they mourn the loss of the quirky, imaginative shops the street used to attract. But with rents so high, shops like those may no longer be viable on Montague Street.
If the COVID-19 pandemic allows for a reset, landlords say the burdens can’t rest entirely on them. Banks will have to be flexible with mortgages and the city will have to adjust the street’s unusually high property taxes. Since property taxes are the city’s main source of income, this will be a tough nut to crack.
Deborah Hallen-Zelinsky, president of the Friends of the Brooklyn Heights Branch Library, Inc. and former teacher at P.S. 8, has lived in Brooklyn Heights for 44 years.
“I miss the gift shops on Montague,” Hallen-Zelinsky told the Eagle. “I used to love to shop at Meunier’s.” She also has fond memories of Cousin Arthur’s book shop. Teachers from P.S. 8 used to take their classes there to hear a story and get cookies, she said. With all the children in the neighborhood, “We need another independent children’s book store on Montague Street,” she added.
Hallen-Zelinsky said she shops in person on Montague Street to support local businesses. As soon as the retail shops were allowed to reopen for Phase 4 of the recovery, the first store she went to was Bentley’s.
“And I bought a pair of shoes that I didn’t need. The next day, I went to Tango, where I bought a gorgeous yellow dress” on sale, she said.
Hallen-Zelinsky would also like to see “a kosher restaurant, a stationary/card shop, maybe another ice cream shop, a jewelry store, an electronics shop, a place for art and dance education classes for all ages, and a chess club,” she said, adding that an affordable clothing store on the street would also be nice.
William Closs, who has lived in the Heights for more than 40 years with his wife Beverly, shops on Montague Street several times a week.
“I shop online now more than ever — but I’d rather not if I can get items locally,” he said.
Closs said he just wants more of what has been there all along — i.e. “restaurants and services.” He added, “And my wife would like to see a bike store on Montague Street.”
Johannesen, owner of James Weir Floral Co., likes the idea of trying out pop-up shops in the vacant spaces.
“That idea of pop-up stores would be amazing. I even know of residents of Brooklyn Heights — say, for example, they practice yoga. For years they’ve been wanting to be able to run their own place. So things like that. Pop-up stores with low rent, hey, who knows, it may work out.”
Johannesen also thinks that a children’s clothing store might work. “There’s so many children in this neighborhood … shoes would be ideal. Also, more diversity in restaurants. And bike shops — everybody’s riding bikes now.”
Take the BHA Montague Street survey here.
Leave a Comment
Leave a Comment