On a recent steamy Sunday afternoon in New York, Mr. Chen, a shop owner in Chinatown, was watching the intense final game of the World Cup. But, he had to do it on the small screen of his cellphone, because his shop is not big enough to squeeze in even the tiniest TV set.
Chen doesn’t know how many square feet his shop has, but if he stretches his arms out, he could touch the walls on both sides. He sells everything from phone cards to bottled water, and his goods are either hung on the walls from the floor to the ceiling or piled on the counter outside of the window. “This might be the tiniest convenience store in Chinatown,” Chen said.
Elsewhere in the city, this may not even be called a shop. It is basically a makeshift closet built under the Manhattan Bridge. Separated from the street by only a thin metal board, it is hotter than the street in the summer and colder in the winter. Subway trains running on the bridge wrap the shop in deafening rumbles that hurt Chen’s ears. But, for $1,000 per month, doubled from a decade ago, this is the only place he can afford in Chinatown.
Just a few blocks north of Chen’s crammed shop is a different world. Ten or so spacious storefronts are completely empty, with “for rent” banners on the awnings covered in dust. Some of them have been left like that for more than a year, as new tenants can’t afford the increased rents after former tenants are pushed out.
Thanks to skyrocketing rents in recent years, this eerie contrast – shops crammed into tiny spaces next door to vacancies of spacious storefronts -- has become a fixed image in Chinatown. Small businesses are struggling to make ends meet, and residents are worried the neighborhood with more than a hundred years of history may be ending.
Small businesses in the neighborhood have had their share of ups and downs. After 9/11, Chinatown merchants suffered a big drop in clientele, and some feared the neighborhood would not recover. Two years ago, a Business Improvement District (BID) was formed – charging businesses fees for services such as street cleaning – in an effort to give retailers a much-needed boost. Businesses have started to recover, but despite a rebounding real estate market in Lower Manhattan, Chinatown retailers are still struggling. High rents have already forced small entrepreneurs to think creatively and utilize every inch of possible (and impossible) space. And, now the Chinatown BID, a public-private partnership facilitating local business development, plans to go even further: To fight against the high rents, the organization plans to buy up vacant spaces and turn itself into a landlord.
In its heyday, Chinatown rarely had any vacant storefronts, forcing tenants and businesses to think creatively. Any space that would allow one person to stand was turned into a commercial rental. Diminutive shops like Chen’s could be seen everywhere.
Those who occupied bigger spaces often sublet out to other businesses to ease the rental pressure as well as to share customers. For example, the shop at 244 Grand Street houses four different businesses: Forever Health Pharmacy, Good Luck Jade, Crystal and Craft, and an AAE delivery counter.
Before, merchants like Chen would have opted for a smaller space because of a lack of vacancies; Now, they’re renting tiny spaces, because that’s all they can afford with soaring rents for commercial spaces. According to the Downtown Alliance, a business development organization, the cost of retail space on the lower Broadway corridor jumped 41 percent last year to $280 per square foot, an increase that more than doubled the 16 percent jump of the city’s average.
Qitan Liu, who owns a delivery shop at 150 East Broadway, pays $3,600 a month in rent. His lease expires in August, and he says he’s worried his landlord will raise the rent, forcing him to move out of the space that he’s been in for 10 years. The two shops adjacent to his have already been pushed out and the spaces are open for rent. The one on his right has been vacant for two years.
“The landlord would rather leave it empty and wait for a preferable tenant than lower the price,” said Liu.
“High rent is fatal to the economy in Chinatown,” said Wellington Chen, who heads the Chinatown Business Improvement District. But to him, the vacant shops also offer a good opportunity for a renaissance.
Chen explained that a major reason for the rental increases is higher property taxes. Many Chinatown buildings are mixed-use with residential apartments under rent regulations by the authorities. So the landlords have to shift the taxes to the commercial tenants, he said. But BID as a non-profit organization is exempt from paying property taxes. If the landlords of the vacant properties join the BID to form a co-op type property trust, he says, they might have to give up some privileges of full ownership, but they will be able to take advantage of the tax exemption and rent the spaces out to small businesses with long-term stable rent.
Chen says the model, inspired by the artists’ co-ops in New York, has never been tried by any business organization as far as he knows.
“It will take sometime to persuade the city government because our plan may cost the city some tax revenues. But this is the best solution so far,” said Chen.