'High-Rent Blight' on the Rise in Manhattan Retail Districts
Tim Wu reports on a counter-intuitive "surge of closings and shuttered shops" in New York's West Village and other affluent neighborhoods with unparalleled demand.
"Abandoned storefronts have long been a hallmark of economic depression and high crime rates, but the West Village doesn’t have either of those. Instead, what it has are extremely high commercial rents, which cause an effect that is not dissimilar. 'High-rent blight' happens when rising property values, usually understood as a sign of prosperity, start to inflict damage on the city economics that Jane Jacobs wrote about."
Wu goes on to list some of the closings that have occurred in the neighborhood—and the rising rents that preceded the loss of the businesses. As for why the vacant units don't immediately get filled by new tenants, Wu speculates that it could be tax benefits, but it could also be a form speculation:
"[Landlords will] trade a short-term loss for the chance eventually to land a much richer tenant, like a bank branch or national retail chain, which might pay a different magnitude of rent. If you’re a landlord, why would you keep renting to a local café or restaurant at five thousand or ten thousand dollars a month when you might get twenty thousand or even forty thousand dollars a month from Chase?"
Wu allows that leaving the blight of vacant retail properties threatens to destroy what makes such neighborhoods so desirable in the first place.
As for what can be done to imitigate the problem, Wu mentions two regulatory proposals with support from local advocates. One would "limit rent spikes by making commercial-lease-renewal disputes subject to mandatory mediation and arbitration, like some baseball salaries." The other would fine landlords for leaving storefronts empty. Wu also mentions the possibility of allowing interim uses in the storefronts.