Small Business

#SaveNYC: A push to keep New York's character

Businesses fight rising NYC rents
Businesses fight rising NYC rents

For more mom-and-pop shops, rising rents are pushing them out of business.

Faced with soaring rents they can't afford to pay, Avignone on Bleecker—a pharmacy in New York City's West Village—is among hundreds of small businesses that get the boot each month. The pharmacy has been in the city since 1832, and in its current location for 86 years, since 1929. Abe Lerner, the current owner, has been with the pharmacy for three decades. But next month, he'll be gone.

"The building was sold last August, and the new landlord wanted to basically triple the rent" to $60,000 from $20,000 a month, said Lerner, who was standing among in-store signs that read "30% off entire store."

"We were paying about $125 a square foot, and they believe they can get about $450 a square foot. To pay triple what I am paying now is just not doable for any business, unless it's a chain."

The name on the new property deed is listed as 226 Bleecker Street Realty LLC, whose address points to a Park Avenue hedge fund, Force Capital Management. The hedge fund did not return CNBC's requests for comment. Pharmacy owner Lerner got notice in December that he would be out by April 30 this year, per a clause in his lease.

Rents soar nationally

The rents are keeping us away—not the business.
Abe Lerner
owner of Avignone, a pharmacy in New York City's West Village
Abe Lerner, owner of Avignone—a New York City pharmacy—is shuttering as his new landlord has tripled the rent to $60,000 a month. The pharmacy has been in the West Village for 86 years.
Source: Kate Rogers

Smaller businesses closing shop amid rising rents is not new. But now some small-business supporters are turning to blogs and social media to launch campaigns to save mom and pops, and ultimately the look and feel of Main Streets.

Business rents from coast to coast continue to climb, according to data from CoStar Group, a commercial real estate transaction database. In New York City, office rental spaces and light industrial, or storefront, market rents have both increased year over year. Rents for both types of real estate are up nearly 21 percent since 2010, according to CoStar Group.

In San Francisco, where residential property rates are rising, the rental problem for small-business owners is even worse. Light industrial rents are up nearly 31 percent, and office space rentals are up more than 65 percent amid a tech boom in Silicon Valley, according to CoStar Group.

"From office space in San Francisco to retail space in New York or warehouse space in Seattle, hot local economies have driven strongly rising rents," said Hans Nordby, managing director of CoStar Portfolio Strategy.

I want to live in a New York that feels like New York.
Jeremiah Moss
NYC blogger behind #SaveNYC campaign

In New York City, a blogger named Jeremiah Moss has been chronicling the demise of established small businesses in Manhattan since 2007 on his website, "Jeremiah's Vanishing New York." In late February, Moss launched a campaign called #SaveNYC through social media in hopes of bringing attention to the issue. His strategy was modeled off of a similar initiative in London, #SaveSoho, aimed at protecting local arts venues in the city. Moss's grass-roots effort has been slow, but is growing.

"New York is losing its unique character," Moss said. "This is largely due to skyrocketing rents, to landlords who kick out small businesses so they can attract chains and get rents three-to-10-times higher," Moss said. "I want to live in a New York that feels like New York. ... This has to stop."

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The Small Business Congress, an advocacy group for small businesses in New York City, said 491 small businesses closed their doors per month in 2014. In 2013, the number was 499 but higher than 485 in 2012.

At smaller shops have been closing, the number of chain stores in New York City continues to grow. In 2014, there were 7,473 chain stores in the five boroughs, up 2.5 percent from the 7,288 chain stores in the city in 2013, according to the Center for an Urban Future, a policy institute.

To be fair, chain stores can be corporate-owned or individually owned franchises, which would categorizes them as small businesses. But some community advocates argue businesses under national brand names are better able to make rising rents.

The outliers

Joe Rocco is a third-generation owner of Jim's Shoe Repair on the Upper East Side. He's among the lucky small business owners, who have been able to negotiate a new lease and remain open in New York City amid soaring rents.
Source: Kate Rogers

But there are cases where small businesses win out over new landlords and chain establishments.

Joe Rocco is a third-generation owner of Jim's Shoe Repair on the Upper East Side. The business has been at its current location for 83 years, since 1932. He was given notice by its landlord, real estate investment trust SL Green. Jim's Shoe Repair lease wouldn't be extended. A Duane Reade was interested in expanding into the store. But in a twist of fate, a frequent customer happened to be attorney Bill Brewer, partner at Bickel & Brewer, who took on the case pro bono.

After more than a year of negotiations, the two parties settled out of court and on Feb. 6, Jim's got a new lease through 2023. A spokesman for SL Green said, "We are pleased the shop was able to stay in place thanks to Duane Reade, who was willing to modify its lease."

(NYC is in danger of) becoming a cement city.
Joe Rocco
third-generation owner of Jim's Shoe Repair on the Upper East Side

Rocco is also pleased, but he realizes he is an exception. "I feel good about New York City having an old business that's staying here," he said. "Hopefully we can start a trend where landlords say, 'Hey, we need to keep old New York, and keep some of these old businesses alive' to keep the character ... instead of becoming a cement city."

For Avignone pharmacy owner Lerner, his New York City story is ending.

Prior to the triple rent, Lerner said his business was thriving despite increased competition from chains and online retailers. And he was able to afford the $20,000 a month rent.

"With all the chains and pharmacies around here, we were still able to increase business every year," Lerner said. "The rents are keeping us away—not the business."

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CNBC's Betsy Cline contributed to this report.