COVID-19

Some NYC businesses are trying to negotiate for lower rent

Camille Petersen Nov 16, 2020
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Joanne Kwong at one of Pearl River Mart's locations. Camille Petersen
COVID-19

Some NYC businesses are trying to negotiate for lower rent

Camille Petersen Nov 16, 2020
Heard on:
Joanne Kwong at one of Pearl River Mart's locations. Camille Petersen
HTML EMBED:
COPY

During the pandemic, many of New York City’s small businesses have struggled to keep up with the city’s expensive commercial rents.

Joanne Kwong, the president of Manhattan retailer Pearl River Mart, said she was paying around $1 million a year in rent for two locations and a warehouse before the pandemic. She said negotiating to try and get a break on her rent is like rolling the dice.

“Our situation is kind of dependent on the whims or the situation of the landlord,” she said.

She said one of Pearl River Mart’s landlords has agreed to reduced rent. Another is demanding 100% of it. Kwong said Pearl River Mart might have to leave that location.

Jawed Farooqi said his revenues have been down almost 60% during the pandemic. He owns a framing store, called Rooq, with three locations in Manhattan. Farooqi said one of his landlords has reduced the rent, another argues about it every month and a third won’t negotiate.

“I was explaining to him that every day I see a new store closing, and he’s like, yeah, you’re right. And I’m like ‘So you know that this is how it is, why do we have to fight?'” he said.

Jawed Farooqi examines a painting at one of Rooq's locations.
Jawed Farooqi examines a painting at one of Rooq’s locations. (Camille Petersen)

Commercial leases in New York tend to be long and they are not very flexible, said Rachel Meltzer, who teaches urban policy at the New School. And, the city doesn’t have a consistent way of regulating commercial rents, even in normal times, she said. “It’s hard to come up with something systematic in the middle of a crisis,” she said.

Meltzer said right now money would be the best equalizer. “Some kind of bailout, just to support these businesses and help them pay whatever rent they have to pay,” she said.

But small businesses do have some leverage. Nicole LaRusso, director of research and analysis for CBRE Tri-State, a real estate services firm, said in New York City, rents are down and vacancies are up.

“There’s not a lot of tenants lined up, waiting for tenant X to move out so tenant Y can move in,” she said.

So if landlords don’t negotiate, they may be rolling the dice too.

COVID-19 Economy FAQs

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

How long will it be until the economy is back to normal?

It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.

How are those COVID relief payments affecting consumers?

Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.

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