Small Businesses Moving Out Of New York City

Date: May 26, 2015

Neighborhood Small Businesses Threatened By Rising Rents

In the latest indicator that urban development is pushing small businesses out of larger cities, the New York Times reports on the story of Eagle Provisions, a small Polish grocery in Brooklyn. Owner John Zawinsky, who purchased the business in 1979 along with his father and brother, laments, “I envisioned that after 35 years, we’d be like smooth sailing, and it’s not smooth sailing.” A developer has offered $7.5 million to the family to turn the building into upscale apartments, and they are taking the offer. The Times suggests the Zawinsky family was fortunate, as they owned their building and thus could choose to take the money and close or to stay. However, “hundreds of other neighborhood institutions in Brooklyn and Manhattan” have been pushed out by rising rents and battles with city regulators. Other examples of neighborhood grocers recently pushed out include a 110-year-old Italian bakery in the East Village, De Robertis Pasticceria and Caffe, and Hell’s Kitchen staple Manganaro’s, an Italian grocery that shut in 2012 after 119 years.

Reuters also noted rising real estate rental costs in the New York City area, specifically the area below 34th Street referred to as Midtown South. The area has seen rising rental prices for 17 quarters in a row, driven by tech companies. In its latest quarterly market report, real estate company Jones Lang LaSalle noted the Midtown South area had a commercial real estate vacancy of 6.1% in Q1 2015, the lowest of any US central business district. Another Q1 2015 commercial real estate report from Colliers International noted the area’s average cost per square foot for office space rose to a record $62.02 during the quarter.

What This Means For Small Businesses

New York City has a history of being unfriendly to small businesses. Rising rental rates for commercial office space are just one piece of this troubling trend. The area’s lack of affordable office space is a problem for small businesses looking to get their products and services to consumers in the largest US city.

Additional Reading

NFIB has previously detailed the anti-small business climate that lingers New York City.

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