Why Big-Box Stores Are Good for the Neighborhood
Back when I was in graduate school in New York City, my daily walk to class took me past a typewriter sales and repair shop. The store was owned by a cantankerous man who learned his trade in World War II. He kept the store open only because he owned the land and was waiting for prices to rise, as the city’s population expanded and Downtown gentrified. The city’s latest efforts in zoning and commercial rent control may create entire streets of typewriter repair shops, killing the vibrancy of commercial districts and preventing consumers from patronizing the establishments of their choice.
Residents of the city’s toniest areas have long tried to control the mix of stores and businesses on their streets. Every time a beloved store or restaurant closes due to increased rents, there are howls of outrage. But what gets ignored is that in most cases the store that replaces the local landmark is more innovative, more popular and, in time, often becomes equally well loved. Though these kinds of tensions in gentrified neighborhoods might seem like a recent invention, they can actually be traced back to the 1940s.
From 1944 to 1963, New York City’s commercial sector labored under a system of rent controls created by the tight economic conditions of World War II. Landlords, predictably, were furious, as tenants periodically “held up” owners in order to get buyouts of their leases. Though the issue was never decisively wrangled in court, a number of Court of Appeals decisions suggested that the prospect of a never-ending “State of Emergency” used to justify rent controls would be increasingly untenable, and they were gradually phased out.
But in 1986, possibly inspired by the flirtation with commercial rent controls in Berkeley, Calif., advocates attempted to re-enact the controls. This campaign, called “Designer Ice Cream Stores versus the Corner Grocer,” ended when the initiative was shot down by the State Legislature.
Yet the idea refuses to die. In 2009, the Small Business Survival Coalition introduced rent-control legislation that attracted 32 co-sponsors, illustrating its emotional appeal to local politicians. Though it was ultimately shot down by the city’s lawyers, its sponsors reintroduced it in 2014, and it may attract a more sympathetic hearing from a more liberal City Council.
Just two years ago, advocates for small businesses used the presumably grim specter of streets full of banks, drugstores, chain restaurants and big-box stores to convince the city to pass the Special Enhanced Commercial District Upper West Side Neighborhood Retail Streets rezoning act. This rezoning limits stores to a maximum of 25 or 40 feet in width, requires owners to rent out the ground floors as commercial space and prevents newer stores from leasing large swaths of a block. This zoning prevents landlords from consolidating space to support larger, more efficient businesses, like, say, supermarkets.
Take the Trader Joe’s on West 72nd Street and Broadway. It’s stuffed into an inefficient layout that employs no fewer than six escalators to allow shoppers to move their carts around the sub-basement. Thanks to these zoning regulations, it can’t expand to the adjacent Duane Reade’s ground-floor space.
Two recent developments should buttress attempts to repel commercial rent controls. In 2014, the New York Court of Appeals ruled that residential rent control, which grants tenants below-market leases, was a form of “public welfare.” And in California, a law that forced owners to pay compensation to evicted residential tenants was recently found to be unconstitutional.
Even so, commercial property owners and brokers need to organize and speak out to prevent the establishment of more of so-called “special” commercial zones. Along with the hit to owners’ and brokers’ revenues, the inability to use the space for its most economically viable purpose will, if left unchecked, seriously impact consumers, and reduce the vitality of commercial districts. Ask yourself: If the beloved red sauce joint of your youth really was the best store for its location, wouldn’t it still be around today?
Craig Roche is a pseudonym for a New York City landlord. Follow him @MrCraigRoche.