Small Businesses On The Edge In Bay Ridge

Here, Gary Nudelman says, is where the 800-gallon fish tank used to be.

Nudelman points to the rear space that now makes up fully half his store. Not long ago, it was devoted entirely to birds.

To the right are three modest rows of reptile tanks; formerly, the lizards and snakes he stocked inhabited their own large room. Likewise for the rabbits, now relegated to a single cage.

“These used to be in a beautiful room that was custom done,” Nudelman says, wistfully. “This was the biggest full-line pet store in New York City.”

Nudelman, 51, the son of two florists who owned a shop in Bay Ridge, loved dogs from childhood and always wanted his own pet store. In his 20s, after apprenticing with a trainer, he opened his first store, on Third Avenue, in 1984. And in this tightly knit neighborhood, cradled in a swath of residential streets along Brooklyn’s southwest shoreline, business boomed. Soon he’d outgrown the Third Avenue space and moved to a larger storefront on 92nd Street. In 1990, he seized an opportunity to move his puppies, kittens, reptiles, tropical fish and rodents into an existing pet shop on nearby 86th Street, a bustling, wide-berthed commercial strip that has been a prime shopping location for something like 100 years.

“It was a giant step. Moving here, we just exploded,” Nudelman says. “86th Street was legendary for the amount of business you would get. It was prestigious. If you were on 86th Street, it was kind of like being in Manhattan. It was like ‘You’ve made it.’ ” He was nervous at the time, but the move paid off. Two years later, Nudelman doubled his floor space, expanding into an adjacent storefront. Times were flush. He drove a Porsche. His store was featured on CNBC. The customers kept on coming.

“It was fabulous,” he recalls, standing behind the computer at one end of his store’s front counter, a standing-room-only spot that has become his de facto office in these leaner times. “This was a neighborhood 20 years ago. It was the heyday here. The people who shopped, you knew everyone.”

He shakes his head ruefully. “That’s over.”

A quarter-century after he launched his business, Nudelman faces a bleaker landscape. One by one, his colleagues, the intrepid fellow shopkeepers who greeted one another as they swept the sidewalk outside their stores each morning, closed up and moved on, driven out of business by a changing neighborhood, a changing world and rents that rose into the stratosphere.

For decades, 86th Street functioned as a sort of meeting place for the neighborhood, with its grocery stores and pharmacies, boutiques and bakeries—shops that were both labors of love for the local families that ran them and anchors for the customers who frequented them. Now chain stores have colonized the street. Third and Fifth avenues in Bay Ridge remain vibrant with small businesses, but 86th Street has ceased to be a community gathering spot and has evolved into a kind of mini-mall, a place where people from elsewhere shop at the Gap, Cohen’s Fashion Optical and Claire’s Accessories rather than where locals do their errands at independent stores.

To many longtime residents of this community, the loss of dozens of independent stores over the past 10 to 15 years has torn a hole in the neighborhood’s fabric, though remnants of it can still be found among the holdouts: the ice cream parlor and restaurant where senior citizens gather for lunch, communing with friends in what, for many, might be their only socializing for the day. The jewelry store where the proprietors have sold engagement and anniversary gifts to four generations of a single family. The hair salon to which loyal clients will trudge in any weather to be seen by the same stylist they’ve known for 40 years.

The national chains and the closed storefronts are not just a depressing view from Nudelman’s window. They are also a chilly reminder of his own dire straits, a reinforcement of the sinking realization that if current trends continue, his business might soon meet a similar fate.

This year, he estimates, his revenues were off by a staggering seven figures from what they were just a few years ago. He made the wrenching decision to downsize in 2008. He asked his two landlords for a rent break, and when one declined, he closed down that half of his shop and cut back to a single storefront.

“We just didn’t need all that space,” he says. He shrugs. “Sometimes you have to take one step back to go three steps forward.”

Nudelman, who now lives in Staten Island, says he used to have some freedom as the owner to come and go. Not anymore, as plummeting business has led to a shrinking staff.

“After 26 years, you don’t want to have to work seven days a week,” he says. “Now I’m back here almost seven days a week.” He’s thought long and hard about the reasons, trying to make sense of the decline: Kids who prefer their Wii and PlayStation to fish and birds. New demographics in the neighborhood, including an influx of immigrants who tend not to have the time, money or inclination for cats and dogs. A 30-month street reconstruction project that at times left his shop all but barricaded, reachable only by navigating metal grates and wooden planks. A new parking lot in the nearby Century 21 that allows shoppers to drive in and out without passing, or even noticing, the other businesses. A thicket of city regulations. An army of traffic enforcement agents who ticket customers when, because they’re about to carry out a 50-pound bag of dog food, they hastily double park. The rents. The economy. The Internet. National pet store chains that can undercut him with lower prices.

In the past few years, it has all crested into a tidal wave of forces that have turned the mom-and-pop business into one of New York City’s endangered species, fighting the odds on a strip where they’re all but extinct.

That sinking feeling

Neither the city nor the state tracks the number of small- business closures or openings, but store owners and their advocates, economists and real estate experts agree that recent years have been extraordinarily difficult for shopkeeping—a risky proposition even in the best of times.

“For small businesses, the margin of error—and the cushion—is less. There are a lot of small businesses that are going from hand to mouth, and in some cases they’re new entrepreneurs living out their dream of opening up a shop. In some cases, they may have taken a second mortgage out, so the struggle is greater for them,” says Robert Walsh, commissioner of the city’s Department of Small Business Services. “If you open a restaurant or a café and put a good deal of money into the capital, ovens, furniture, construction, and you’re looking to get that back over time, it’s like a mortgage. And for some, it’s a scary scenario when you build it and they don’t come.”

In the first half of the decade, the booming economy sent rents soaring. Competition for space was fierce, and national chains were elbowing one another to claim ground in a city they once scrupulously avoided. The recession that followed may have flattened some rents, but it also delivered a new blow to the independent shopkeepers who, unlike their national competitors, had fewer reserves to fall back on.

“They have a distinct advantage by virtue of having a pool of money. We have no access to other money. I can’t afford to wait anything out,” Nudelman says. “In the past five years, I can’t tell you how many of us have gone out of business.”

A study last year by U.S. Rep. Anthony Weiner’s office found that of 5,991 stores surveyed citywide, 726 had closed or were in the process of closing—more than 12 percent.

According to the federal Small Business Administration, the number of SBA-approved small-business loans in the five boroughs plummeted in recent years, dropping from 4,012 in the 2006-to-2007 fiscal year to 669 last year, a drop of 83 percent. (The number of loans in New York City did rise 70 percent in the first nine months of the current fiscal year over the same period last year, a jump the SBA attributes to the Recovery Act, which provided a 90 percent guarantee to SBA loans and eliminated loan fees for borrowers.)

Steve Null, an advocate for small businesses who founded the Coalition for Fair Business Rents in 1984, cites the number of commercial eviction warrants— nearly 29,000 in New York City between 2006 and 2009—as an indicator of how businesses are struggling. Null estimates that only about 33 percent of business closures result in evictions and uses that estimate to infer that 87,000 small businesses have closed over that period.
“We’re digging a hole,” says Null, who championed city legislation two years ago that would have implemented protections for merchants in the commercial-lease-renewal process; it was never enacted. “Small businesses were the engines that created jobs in New York City.”

Even data that encompass the boom years suggest that the growth of larger businesses is outpacing that of smaller businesses in New York City. The number of businesses with 500 to 999 employees jumped 46 percent in Brooklyn alone between 2002 and 2007, from 34 to 54, compared with a 10 percent increase—40,302 to
44,253—in all Brooklyn businesses over that period, according to U.S. Census figures. The Census data show just how vital to the city’s economy small businesses are: Establishments with four or fewer workers account for 61 percent of all businesses with employees citywide.

Studies by the think tank Center for an Urban Future show that over the past two years, chain stores have increased their presence in the city, even as the economy has foundered.

“We did find that for a surprising number of the chains … many of them actually added stores at a time when there was a pretty profound recession going on,” says the center’s director, Jonathan Bowles. “It made me think that maybe some chains like Dunkin’ Donuts or Walgreens may be taking advantage of the decline in real estate prices in this downturn in order to expand. Some chains went out of business, but a good number of the national chains were actually expanding in New York. I think it’s certainly possible that some mom-and-pop businesses shut down in this economy and chain stores are taking their spots.”

Taking the “neighbor” out of “neighborhood”

It’s a trend that has alarmed many neighborhood activists and preservationists, who fear that the loss of independent stores along main streets will erase some of the distinctive culture that makes new york newyork.

“When you go into a store, and maybe the owner knows you by name, maybe their kids go to the same school your kids go to, maybe they live in the neighborhood—these are [interconnected] relationships that really matter to how you participate in the place where you live and that are severed when national chains move in,” says Stacy Mitchell, author of the book Big-Box Swindle and a senior researcher for the Institute of Local Self-Reliance, a Minneapolis-based nonprofit. “The neighborhood loses its personality. It no longer has that sense of community that comes from people in the neighborhood being knit together in a web of social and economic relationships.”

The phenomenon is a familiar one in some high-rent environs of Manhattan, where stretches of several neighborhoods—notably Soho, Greenwich Village and the Upper West Side—have been transformed into virtual strip malls with combinations of stores identical to main streets anywhere in the U.S.

“We’re very concerned about it. One of the things we celebrate cities for and about is their livability—their street life and diversity—so to see small retail businesses, mom-and-pop businesses, disappearing is something of great concern to those of us who care about quality of life,” says Vin Cipolla, president of the Municipal Arts Society, a planning and preservation group. “It’s obviously disappearing across the city. We can see it in every neighborhood.

We see it on the sidewalks. It’s altering the character of our city forever, and it’s a big deal.”

The loss is also an economic one. According to the state Department of Labor, 1 out of every 7 employed New Yorkers works for a business with fewer than 10 people on staff. Small businesses generate billions in taxes and fees for the cash-strapped city and state. National studies show that for every $100 spent in a locally owned business, $85 is reinvested in the community—whether in paychecks for employees or goods and services purchased from other local businesses— compared with the $15 that stays local when that $100 is spent at a national chain.

“I take my money and spend it in Brooklyn,” Nudelman says. “Their money goes back to a corporate office.” Independent businesses also offer more stability for their employees. Eric Treworgy, CEO of STRIVE, an East Harlem– based employment agency, says chains tend to offer mostly part-time positions, causing their workers to change jobs more frequently. Small employers, while they may not be able to offer the varied opportunities and benefits of a larger company, tend to hire full-time workers. The decline in the economy has led to less shopping in general.

Meanwhile, the ever-rising premium rents on 86th Street have made competition cutthroat. Century 21 has begun selling pet beds. The national pet superstores, Nudelman says, have different kinds of resources to survive the downturn.

“I’ve had customers over 20 years—they’ve known me since I was little,” he says. “They come and talk to me. A chain store, they don’t know the area. Some of the people they hire are not going to be as experienced with animals as I am. They don’t know nutrition. They don’t know training. I can give people more detailed information. I can order them things special. I can coach them on how to handle situations. Pets are very specific.”

Yet business has still declined. So Nudelman changed his product mix. He slimmed down his stock. He cut his staff and increased his own hours.

“You have no choice. You learn to buy better. You become leaner. You use your staff better,” he says. “But if it doesn’t start doing something soon, I’m going to be out of business after 26 years.”

Read more about the plight of small businesses in New York City.