New York City

Business Improvement District

Annual Conference

July 13, 2010

The Future of Retail Steven Spinola, President, REBNY

• Introduction

• Emergence of BIDs

• Outlook for Retail

• Problems Ahead – More Politics than Economics

• Conclusion

The Emergence of BIDs

Fulton Street Mall in 1976 began BIDs.

Focus on basic services—clean, safe streets.

The Emergence of BIDs

Today - 64 BIDs generating $104 million, serving over 3,200 block fronts and 16,000 businesses.

Employing over 530 sanitation workers and over 360 security workers. Essential to a vibrant retail corridor.

Economic recovery is beginning.

Momentum translating into retail sales growth.

National retail sales were 9.24 percent higher in March, 9.77 percent higher in April, and 7.41 percent higher in May than a year ago. 

NYC retail employment has added 3,200 jobs since the beginning of the year.

The Outlook for Retail

 6,800 more people employed in retail in NYC this May than last May.

Demand for prime space remains healthy.

Outside prime locations demand is weaker.

Retail is highly localized.

The Outlook for Retail

The Outlook for Retail

Average Ground Floor Asking RentsSelected Manhattan Corridors

Spring 2010 

Madison Avenue (57-72) $960Third Avenue (60-72) $267Broadway (72-86) $291Broadway (Times Square) $1,400Fifth Avenue (49 – 59) $2,300Fifth Avenue (42-49) $425

 Major large leases: Aeropostale, Disney in Times Square;

Uniqlo on Fifth Avenue

The health of the consumers is key for retail.

Recession impact on luxury goods sector.

The efforts of the Madison Avenue BID.

The Outlook for Retail

Impact on “Mom and Pop” retail.

Shortage of working capital and lines of credit.

Blame problems incorrectly on rising rent.

The Outlook for Retail

Small retail stores success stories:

Brentwood Pharmacy new lease on West 8th Street, joining its location on West 14th Street.

Lamazou Cheese in Murray Hill opens its first restaurant, a block away from its current shop.

The Outlook for Retail

Unions use legislation to raise the pay and benefit scale of employees, not organizing and negotiation.

BIDs and Prevailing Wages

Mandating prevailing wages for sanitation and security. Reduce staff and cut services.

Bill placed ideological goal above the mission of the BIDs and their benefits for the neighborhood and the city.

Problems Ahead – More Politics than Economics

Brooklyn Long Island

People 2.5 million 2.7 million (Nassau 1.3 – Suffolk 1.4)

Regional Malls 1 7

Mall/Person 1:2.5 million 1:386,000

Soft goods departments store/person

1:833,000 1:100,000

Retail Stores in BrooklynCompared to Long Island

Bronx Long Island

People 1.3 million 2.7 million

Regional Malls 0 7

Discount Apparel Stores 5 40

Consumer Electronics 2 23

Home Improvement 2 20

Department Stores 3 35

Discount Department Stores 3 22

Home Furnishings 1 10

Retail Stores in the BronxCompared to Long Island

Mandatory Paid Sick Leave

20 or more employees: 9 paid sick days a year

Less than 20 employees: 5 paid sick days.

Higher costs on small businesses.

Commercial Rent Control

Mandates arbitration for lease renewals. Arbitration only binding on landlord.

Tenant can stay in the space at a 5 percent increase.

Tenant: A right of first refusal.

1969 NYT article with the headline “High Rents Close ‘Village’ Stores”.

Commercial Rent Control

Florence Meat Market – Still in business at the same location

A new fruit and vegetable market has opened on the same block.

Francis Typewriter and Television and a second hand book dealer are no longer there - businesses a victim of a changing market.

Landmarking and Retail Stores

Proliferation of historic districts.

Expansions of the Upper East Side and SoHo.

Lease negotiation in a landmarked property.

Large national retailers want their trademark marketing.

Reluctant to spend money for landmark process.

Small stores can’t pay for the approval process.

Small boutique stores often don’t pay a high enough rent.

Uniqueness and creativity of Boutiques are desired by residents.

Landmarking and Retail Stores

Conclusions

New York City can support more retail stores.

Must lower operating costs and stop mandating wages and benefits.

Strong businesses survive and thrive; weak ones don’t.

BIDs create an environment that helps the strong businesses get stronger and gives the weak ones the best chance of success.

BIDs are a vital element in the future of retail in NYC.