The storefront vacancy rate in Manhattan is now estimated at 6.5 percent — the highest since the early 1990s — and a new report says the rate will climb to 10 percent next year.
Even those numbers don’t show how bad the situation is in some parts of the city, including some of the more desirable shopping districts where the vacancy rate is more than 15 percent.
“It’s a crisis,” Stephen Null, director of the Coalition for Fair Business Rents, told The New York Times.
“Lease renewals are the single biggest killer of small businesses in New York City. Store owners can’t pay their rent, and they can’t keep their businesses going.”
The New York City Council is presently considering a Small Business Survival Act, legislation the Bloomberg administration doesn’t support.
If passed, the act would require businesses to have the option of 10-year leases, renewals and the right to mediation if they cannot reach an agreement.
Such a step may be necessary. Store closings are reducing the amount of taxes the city collects: Sales tax revenues have declined by 3 percent through May, to $4.15 billion from $4.3 billion the year before, according to the city’s Office of Management and Budget.
The commercial real estate market could suffer from the same foreclosure troubles that have afflicted the residential market, Federal Reserve chairman Ben Bernanke told the House Financial Services Committee, The Wall Street Journal Reports.
"We hope to open up the mortgage-backed securities market, which is an important source of funding and finance for the CRE market," Bernanke said.
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