Jackson Heights Life

I have wondered this ever since I moved here and heard the rent on the Beauty Supply place on 84th St. and 37th Ave. is or was $17,000 per month.

Now someone mentions in another thread that the shoe repair place on 37th Ave between 84th and 85th is not going to renew their lease because the rent is supposed to triple (though I don't know the dollar amount on the current rent so don't know how outrageous the new rent will be).

How do all the luggage/cheap gift places (etc.) stay alive or even manage to open in the first place?  Are they really doing that much business?

They probably get small business loans as incentives to start up a local business and depending on the type of store get a large customer rate. 

You'd be surprised how popular cheap luggage is!

Here is the former Greenpoint Bank has been vacant for almost 3 years

http://www.rkf.com/cgi-bin/Go.cgi?x_action=propertySearch&d_id=78&submitted=1&p_market=5&p_rentPeriodSelector=monthly&p_groundFloorRentMax=&p_groundFloorRentMin=&p_sizeSelector=byTotalSize&p_crossStreet=&p_region=1&p_sizeMin=&p_blendedRentMin=&p_sizeMax=&p_blendedRentMax=

Maybe this is the reason
why we can't get any decent retail in the neighborhood
( A Borders would look great here & they will surely have high sales if they venture out here)

Raw rent numbers don't tell us a thing. We cannot form an opinion about rents on 37th avenue without doing a comparative analysis. According to the previous post, the former Greenpoint space on 37th Avenue is 300,000k for 3,400sf - which is about $88/sf a year (I'm not sure given the information whether this includes basement space. If it does, the rent is less than $88/sf)

Consider this - on some major commercial strips in Manhattan rents are almost $300/sf a year on average. The average for all of Manhattan, both major and minor corridors, was about $100/sf a year. See the attached article: http://www.huliq.com/2530/manhattan-retail-rents-continue-to-surge

I also read another article where asking rents on Austin Street in Forest Hills (which supports a healthy mix of national and local retailers) is about $150/sf. Frankly, for some businesses $88/sf might be a good deal. The only thing that keeps a retailer from paying these rents is whether they make enough profit from customers to do so. Clearly, many of them can and do if they provide the right mix of goods, at the right price, with the right level of service. If they don’t, they go out of business. That’s not something that any of us can change with discussion on a listserve. That’s economics.

I should add that the one thing that may skew these rents is money laundering and drug dealing. Getting police involved may be necessary to ensure that these illegal activities do not cause average rents to rise. Legitimate businesses cannot compete against illegal businesses, and they shouldn’t have to.

As noted earlier, another important factor is that today's asking rents may be quite different from the rents that existing businesses are paying.  An established business may have a lease with a rent low enough to survive despite low sales.

Todd, I'm almost sure that the beauty shop I refer to in my previous post has been in business for less than 5 years in the neighborhood.  They may have entered into a long-term lease, but I have to question whether the rents on commercial spaces on 37th Avenue have substantially increased within the past 5 years.  Unlike a verifiable business like Newman Jewelers that has been in existence for the past 30 years and may be  renting under a long-term lease, the beauty products shop simply has not been around long enough to have witnessed significantly lower rents.

"What we really need here is commercial rent regulation so that the little guy still stays in business. Remember...greed is one of the seven deadly sins"

Having government (especially the inept New York City council) step in and mandate a commercial rent regulation would be the worst possible thing anyone could do.  The end result would be that landlords would simply stop renting to businesses, since government would set rents so low that landlords wouldn't be able to make any money.  Witness the shortage in housing in New York due to rent control laws. 

Price controls didn't work in the old Soviet Union, they don't work in Cuba nor North Korea, and they won't work in New York City either.  Even the North Koreans know this, as they have relaxed price controls recently and allowed limited free markets to operate.  If you're in favor of commercial rent regulations, maybe a move to Cuba or North Korea might be in order.  I've heard that North Korean winters are simply marvelous, and according to Michael Moore, Cuba is at the forefront of all the latest medical developments, not those evil capitalist companies such as Pfizer and Bristol Myers! 

As for greed being one of the seven deadly sins, I'll allow Gordon Gecko the last word on that:

"The point is, ladies and gentlemen, that: Greed, for lack of a better word, is good. Greed is right; greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms, greed for life, for money, for love, knowledge — has marked the upward surge of mankind and greed, you mark my words — will not only save Teldar Paper but that other malfunctioning corporation called the USA."

It's an interesting phenomenon that landlords will keep raising the rent until the tenant can't afford to pay. Here's why: the landlords (real estate speculation companies) are taking out loans against the value of their property. The only way the lenders can assess the value of the property is by looking at what is the current rent. Landlords, just like homeowners, are looking to extract the value of their property so that they can invest in other things, such as more properties to jack up the rent on.
In my old neighborhood, this happened about ten years ago, and virtually all of the small businesses were replaced by banks and starbucks. That's why I moved here. For some reason, banks are willing to pay the high rents. As a result, we will soon have very good access to our money, but nothing to spend it on because all of the little restaurants and shops will be gone!
The only thing we can do to stop this is to not patronize banks. Put all your money into an online bank that has no retail outlets, such as ING Direct. Also, when you buy coffee, try to find the little bakeries that sell it for less than a dollar, because a successful starbucks may spawn two or three more.
Mike