Rising Rents Threaten Immigrant Small Businesses: Report

Until a few weeks ago, the west side of Bainbridge Avenue north of 205th Street in the Bronx featured a Yemeni corner store, an Anglo-American-run pharmacy, a Korean grocery, a Turkish deli, an Italian pizzeria (the head cook is Croatian), a Bangladeshi discount store, a Korean laundry and a Mexican grocery. It is possible to walk from 205th to 206th and hear more tongues than the United Nations has official languages.

Now the Korean grocery is gone, its storefront shuttered and a “for rent” sign taped to it.

It’s not clear why. Perhaps the couple who ran it retired and moved to Florida. Maybe competition from other produce sellers in the neighborhood grew too intense. Or, it could have been the rent.

Whether rising commercial rent doomed Sunny Fruits & Vegetables or not, it’s a major worry for immigrant businesses around the city, according to a survey released this week by the Association of Neighborhood and Housing Development.

Tapping 90 immigrant business owners in Chinatown/Lower East Side in Manhattan, Jackson Heights in Queens and Kingsbridge in the Bronx, the research found that 77 percent of owners believe they are overburdened by their rent. Nearly half said they’d had to raise prices because of their rent, and more than a quarter reported they’d laid off employees to close the gap between revenue and rent. Roughly one in five didn’t have a lease.

Of course, businesses come and businesses go. Twenty years ago, you couldn’t have walked more than 100 feet in any direction along the Bainbridge/204th Street corridor and not passed an Irish bar. They’re all gone, as are most of their customers. Amid that churn of retail succession and neighborhood change, however, the businesses surveyed by ANHD have roots. They’ve been operating for an average of 13 years. They employ an average of four workers.

A sizeable minority of businesses (40 percent) reported being harassed by their landlords. This complaint was particularly pronounced in Kingsbridge, where only 68 percent of surveyed businesses reported having a lease, 89 percent said they are overburdened by rent and 57 percent said they’d experienced harassment. The plan to develop the long-vacant Kingsbridge Armory into an ice-sports center has set off a wave of speculation and rent hikes in the area, according to the report.

At a panel discussion about the ANHD report on Wednesday, a representative of the city’s Department of Small Business Services said SBS had engaged more than 250 business owners in its Commercial Lease Assistance Program, and pointed to the 2016 Commercial Tenant Harassment Law as a tool against undue pressure.

But Lena Afridi, ANHD’s director of economic development policy, said the city’s existing efforts fall short. “There’s still a lot more that needs to be done,” she said, noting that while the 2016 law was a positive step, “there’s no enforcement component to it.” The law empowers business owners to take landlords to court, but the onus is on them. (The fact that SBS has never been an enforcement agency might be an obstacle to addressing that shortcoming in the ’16 law.)

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Bolstering enforcement, cutting red tape, and making it easier for small businesses to access capital and get legal assistance would all help, ANHD says. It also recommends regulating the commercial rent market – specifically, penalizing landlords that warehouse commercial real-estate to wait for the higher rents of some future day. “Vacant properties decrease foot traffic, which adversely impacts existing small businesses in commercial corridors.”

The report does not mention the Small Business Jobs Survival Act, an idea that has been bandied about in the City Council since the Koch administration and last fall had its first legislative hearing in a decade. The bill would require commercial landlords to state a cause before declining to renew a lease, and if a lease is renewed, require a 10-year term and allow arbitration if the tenant believes the demanded rent is too high. It remains unclear if the controversial proposal will get a Council vote under Corey Johnson.

Even if SBJSA were to pass, tenants would still need legal advice and protection against harassment, in order to exercise their expanded rights to stick around.