A commercial rent-regulation bill introduced in the looney-leftist City Council this week is so out of touch with reality that one can only wonder why voters elect politicians so opposed to their best interests.
It’s a warning that the Big Apple’s commercial future is bleak unless more sober-minded pols push back ruthlessly and relentlessly against a swelling tide of anti-landlord, anti-profit sentiment.
The bill was the brainstorm of Councilman Stephen Levin, whose 33d District encompasses portions of a diverse array of Brooklyn neighborhoods, including Downtown Brooklyn, Bedford-Stuyvesant, Dumbo, Brooklyn Heights, Williamsburg and the Navy Yard.
It would impose mortally destructive rent “stabilization” on landlords of “local businesses.” A city panel (appointed by the landlord-loathing council, of course) would have to approve rent increases on stores and office blocks of 10,000 square feet or less and on manufacturing spaces of 25,000 square feet or less.
“Time and time again, we’ve seen businesses shutter in my district and throughout the city due to rent increases that are beyond their capabilities,” Levin said.
But anyone with a clue about the “retail apocalypse” — and that includes City Comptroller Scott Stringer and Planning Commissioner Marisa Lago, neither a landlords’ tool — knows that widespread empty storefronts are due to many factors unrelated to rent.
Online shopping has laid waste to brick-and-mortar stores all over the country. Retail-space tenants nationwide, from Gymboree to Forever 21 to Diesel USA, have filed for Chapter 11 bankruptcy, and it has nothing to do with rent.
New York merchants also face soaring property-tax assessments, unaffordable minimum-wage hikes, paid-leave mandates more costly than anywhere else and a plague of storefront-blocking “sidewalk bridges” unparalleled on earth. To say nothing of crippling over-regulation, much of it thanks to the council itself.
Rather than help suffering mom-and-pops, Levin’s bill would torpedo the free market with a barrage of unintended consequences.
Among them, it would turn every lease negotiation into a dragged-out battle when time is of the essence to both sides; discourage landlords from ever renting storefronts to small businesses again; and wreck the bottom lines of tens of thousands of apartment buildings that rely on store rent income to pay their bills.
Ironically, the main beneficiary of such a measure wouldn’t be small merchants, but larger retail chains that don’t need help to negotiate new leases.
A store of 10,000 square feet or anywhere near it is rarely a “small business.” The vast majority of single-floor shops and eateries in the city fall below Levin’s size threshold.
But the ranks of 5,000- to 10,000-square-foot retailers are dominated by the very culprits that are often blamed for driving out mom-and-pops — i.e., bank branches, Starbucks outlets and pharmacies such as CVS and Duane Reade.
Sephora is a giant international brand that boasts 430 stores in North America alone. Is its new, 5,500-square-foot location on Flatbush Avenue in Brooklyn a “small business” or even “local?”
How about the relaunched Pastis in the Meatpacking District, which is part of a huge national restaurant empire? It spans 8,500 square feet.
A more seriously crafted bill might seek to protect only truly small shops — say, under 1,000 square feet — from huge rent hikes. Although likely just as ill-advised, it would at least be true to the spirit of saving mom-and-pops. But to grasp the distinction requires more due diligence and common sense than the bill’s 10 sponsoring councilmembers apparently have time for.
Levin surely knows his plan has near-zero chance of becoming law. Speaker Corey Johnson previously put the brakes on a “Small Business Jobs Survival Act” bill full of landlord-crunching provisions.
Levin’s bill is in some ways even more radical, which is the whole idea. Its aim is to appease activist constituents who hate capitalism and private-property ownership, as well as non-ideological voters who’ve been fed the lie that property owners get tax breaks on vacant storefronts.
Meanwhile, Mayor Bill de Blasio continues to urge state lawmakers to slap a penalty tax on landlords unfortunate enough to have empty stores in their buildings. If he and Levin ever got their way, the “shopping capital of the world” will become one giant, going-out-of-business sale.
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