Windows of Missed Opportunity

Lower Manhattan Leads New York in Languishing Retail Space

Lower Manhattan has a higher percentage of vacant storefronts than any other area of the five boroughs, according to data from the City’s Department of Small Business Services (SBS).

At an April 17 hearing of the Small Business Committee of the City Council, chairman Oswald Feliz noted, “Manhattan Community District 1 reports a sky-high vacancy rate of 22 percent,” noting that this was the biggest tally in any of the 59 community districts through New York City. Community District 1 comprises 1.5 square miles, bounded roughly by Canal, Baxter, and Pearl Streets, and the Brooklyn Bridge.

SBS’s “Report on Storefront Businesses” for the fiscal year 2023 notes that there are 2,931 storefronts in CD1, of which 1,875 are occupied by operating businesses and 516 are empty. This is considerably worse than the overall proportion for Manhattan (15 percent) and double the vacancy rate for the City as a whole (11 percent).

This rash of vacancies comes in spite of significant declines in local retail rents. According to the Real Estate Board of New York’s “Manhattan Retail Report” for the second half of 2023, average asking rents in the Broadway retail corridor between Chambers Street and the Battery stood at $319 per square foot at the end of last year. This represents a 19.2 percent decline from the $395 that landlords were asking for the same space at the end of 2021.

City Council member Christopher Marte said, “we can’t let big real estate interests determine every aspect of our lives—from how much our rent is, to where we can afford to shop, to the vibrancy of our communities. Any solution to the vacancy crisis must come through a crackdown on real estate portfolios that write-off these vacancies that blight our neighborhoods. Some of the most prominent empty storefronts are owned by companies with big portfolios: they’re in Soho, on Greenwich Street, in Battery Park City. We know these companies can find tenants; it’s just that they don’t want to.”

“We saw many of our favorite businesses close during Covid, even ones that did receive pandemic assistance, because their property owners claimed they needed the full amount of rent, right away,” Mr. Marte continued. “The math makes no sense, as some of these storefronts—like 20 Elizabeth Street in the heart of Chinatown, where Jing Fong used to be—are still vacant. These landlords do not care about the vibrancy of our blocks, the jobs these businesses provide, or the community that small businesses help sustain and build.”

SBS says that the average storefront within CD1 employs 10 staff and pays $41,792 in sales taxes. These metrics suggest that vacant retail spaces in Lower Manhattan represent more than 5,100 lost jobs and $21,564,672 in annual tax revenue forgone.

Joseph Jourdan, a spokesman for SBS, said, “thanks to our administration’s prudent fiscal leadership and the plans laid out in Mayor Adams’s Blueprint for Economic Recovery, New York City has recovered all of the private sector jobs lost during Covid—and small businesses are responsible for nearly half of all jobs created since 2022. Storefront vacancies were rising before the pandemic, and they’re starting to come down.”

He added, “the City of Yes for Economic Opportunity plan will allow new types of businesses to open in vacant storefronts through the modernization of our zoning code. As more New Yorkers return to the office and landlords welcome even more diverse businesses to their neighborhoods, we are confident that the New York City we build today will be more prosperous and resilient in the long run.”

A spokesman for the Downtown Alliance, which operates the business improvement district for part of Lower Manhattan (from Chambers Street to the Battery, between West Street and the East River), notes that the closures of retail stores within that area bottomed out in 2023—tapering from a high of 160 in both 2020 and 2022 to 42 last year. While 81 new stores did open in 2023, for a net gain of 39 shops, the accumulation of vacant storefronts is pronounced.

Struggling retail space is not a new problem for Lower Manhattan. In 2019, a report from then-City Comptroller Scott Stringer documented that just one Downtown zip code—10013, which covers parts of western Tribeca, SoHo, and the Canal Street corridor in Chinatown—was home to 319 empty retail spaces, comprising almost 300,000 square feet of unused street-level property. These vacancies amounted to more than 12 percent of retail spaces within the district and almost ten percent of all retail square footage (more than 4.8 million square feet). These metrics contrasted sharply with the 2019 citywide average of 5.8 percent vacancy for storefronts.

“Storefronts are the heart of many New York City neighborhoods,” Council member Feliz said at the April 17 hearing. “They are where locals go to conduct the business of everyday life, and many thriving businesses can impart a sense of community and strong neighborhoods.”

“The opposite can also be true,” he added. “The high number of ‘going out of business’ or ‘for rent’ signs creates a sense of unease, or discourages new businesses from opening up and investing. Vacant storefronts create many challenges for communities. Studies show that one vacant storefront can drastically decrease the amount of foot traffic in a commercial corridor, affecting the surrounding community. We’ve seen in many areas that they turn into garbage dumping zones and they turn into graffiti zones.”