Market ranges from bears to bulls, for Downtown retailers
By Ronda Kaysen
For the first time in his 30-year culinary career, one of Eric Tevrows restaurants failed this month. Coast, an upscale neighborhood eatery located across the street from the World Trade Center site, drained half a million dollars from his other two restaurants in the single year it existed and never managed to get off the ground.
Just a few blocks north, on West Broadway and Chambers St., business is booming at Butter and Eggs, a high-end furniture and interior design store that opened in 2003. Its been a boon since we opened, said owner Judy Olson Dunne, adding that since her store landed in Tribeca several other small furnishing stores followed suit. The new competition establishes this as the premiere home furniture and home furnishings neighborhood.
Four years after 9/11, on the eve of a mammoth construction phase that will reinvent the geography of Downtown, business owners experience radically different situations, depending on block to block location and what services they provide. While some business owners still suffer from a loss of W.T.C. office worker clientele, others enjoy a new residential population filling the void.
Right now you have a divided Lower Manhattan, said Joel Kopel, store manager of William Barthman Jewelers and chairperson of the Community Board 1s small business task force. The further away you are from the big dig, the better it is.
Downtown has been sliced into four distinct quadrants since 9/11, with Chambers St. dividing north from south and the W.T.C. site separating east from west.
Businesses that depended on the thousands of workers who once peopled the W.T.C. mainly south of Chambers St. between West St. and Broadway are now struggling. Arthur Gregory, owner of the A & M Roadhouse on Murray St., recently appeared in housing court over a rent dispute with his landlord. On the day he was there, of the 51 cases on the docket, 18 of them were below Canal St. Of those, seven were on John St. alone and several were on Williams St., he told Downtown Express. Gregory hashed out a deal with his landlord to lower his rent, but many businesses will face eviction. Its all a post-9/11 issue, are you kidding? said Gregory. There were 80,000 people who worked in those towers and theyre not there anymore.
Office vacancy rates remain high, at 16.3 percent in May, according to C.B. 1 boardmember Richard Ellis, compared with 10.3 percent in Midtown. The vacancy rate is likely to stay high for some time. Only 20,000 sq. ft. of 7 W.T.C., the first tower to be rebuilt since the disaster, has been leased so far. Larry Silverstein, the buildings owner, has been unable to land an anchor tenant for a building that is expected to open soon.
Tevrow, a longtime fish purveyor, opened Fresh on Reade St. in Tribeca less than a year after the W.T.C. disaster. On a recent Saturday night, Fresh, a large, airy space doused with tropical colors, was bustling. But his two other restaurants, Shore and Coast, both located below Chambers St., never enjoyed the same success. Both closed earlier in September. Although Tevrow hopes to renovate Shore a catering facility on Murray St. and reopen it, Coast on Liberty St. is closed for good.
Shore was not the only business on Murray St. to close in September. Orange Bear Bar closed and Nathan Hales Bar and Grill moved to Warren St., one block north.
People, when theyre done working, they want to get out of there, said Tevrow of the area close to the W.T.C. I dont care if youre the best restaurant in New York, youre not going to be a destination down here. Until you see some building going on, youre not going to find that.
Even at Century 21, the forever-crowded discount department store on Church St. across the street from the W.T.C., business is not what it used to be. It is a rebound and it is a process and we are definitely rebounding, but I cant tell you that things are great, said Jeffrey Jasner, executive director of operations for Century 21.
Theres a perception that theres a limitation of outlets in the Downtown area, said Patrick Roy, director of marketing and sales for Millenium Hilton on Church St., which faces the W.T.C. site. He said hotel guests tend to head to other neighborhoods Tribeca, Soho and Midtown for meals and entertainment. Hopefully with the growth of the residential market, that will change.
Some of the Downtown population has been replaced with tourism, but this new breed of tourist, drawn to the remains of the W.T.C., is markedly different from pre-9/11 tourists who visited Downtown as they would any other Manhattan destination. They get off the trains, they look at the site and the only thing they use the restaurants for is the bathroom, said Tevrow.
The retail vacancy rate below Chambers St. went up after 9/11. Immediately after the disaster, the retail vacancy rate nearly doubled from around seven percent to more than 12 percent at the beginning of 2002. By mid-2003 it had spiked to as high as 13.6 percent, according to Wall Street Rising, a nonprofit advocacy group founded after 9/11. Since then, the vacancy rate has fallen. It hovered at 11.6 percent in 2004, when the organization conducted its last survey.
Although rebuilding will beckon a new era to the neighborhood, it will also require tremendous construction nearly $10 billion in new construction over the next 20 years, according to Charles Maikish, head of the Lower Manhattan Construction Command Center, which was created to oversee the construction projects. And construction means torn up streets, storefronts obscured by scaffolding and disruptive drilling.
The Ritz Carlton Hotel in Battery Park City is already feeling the effects of the new development. Construction for the new Route 9A promenade is happening right outside the hotels window, to the dismay of many guests. Occupancy is high, but guest satisfaction is not, due to traffic concerns and construction noise, said Jennifer Obserstein, a spokesperson for the company. Oberstein hopes the hotels guests will give us another chance, but sees the inconvenience as a necessary annoyance. These are things that need to be done to make the neighborhood even better, she said.
In recent weeks, several Downtown small business owners and advocates have begun to reach out to local and government officials in an effort to gain support. C.B. 1 is planning a town hall meeting in October at Pace University for small businesses.
Were seeing small businesses continue to close at a rather rapid place, said C.B 1 chairperson and Wall Street Rising founder Julie Menin. We really need to do more to assist the small business community.
Menins restaurant, Vine, closed in January. She attributes the restaurants failure to the ongoing closure of Broad St. You just couldnt sustain it, she said.
Seven small businesses have closed on Broad St. in the past 18 months. The street has remained closed since shortly after Sept. 11 to protect the New York Stock Exchange.
Some business owners would like to see the city and state offer them tax incentives such as a tax free zone south of Chambers St., or a waiver for liquor licenses and other fees. Menin, who no longer runs with Wall Street Rising, suggested creating additional signage and increasing taxi stands to offset street closures and scaffolding.
If the government will just give us some help for a couple of years, then itll run smoothly, said Gregory of the A & M Roadhouse. None of us came down here to open businesses expecting everything to be gone.
Not everyone is convinced that money will solve the problem. If you dont have the core base there, all youre doing is postponing the inevitable, said Tevrow, who has owned 11 restaurants in total, many of them in New Jersey.
There are pockets of tremendous growth Downtown. W.T.C.-bound tourists might not be frequenting Downtown restaurants in large numbers, but they flock to Century 21 to cash in on the weak American dollar and the affordable wares. On the positive side, Lower Manhattan, as a result of 9/11, has become a tourist destination, said Jasner. And we are feeling the positive effects of that.
The store embarked on a 5,000 sq. ft. expansion last April that will be completed by the middle of the month.
At the Ritz, which opened its 298-room Battery Park City location four months after 9/11, business is at its peak. Were doing just as good and in some cases better than Midtown, Obserstein said.
Whether Downtown is in a slump at all depends entirely upon whom you talk to. Faith Hope Consolo, chairperson of the retail leasing and sales division for Prudential Douglas Elliman, insists business is smashing. The vacancy rate is not out of shape at all, she said, noting that vacancy numbers for the entire Downtown area the swath from Canal St. to the tip of the island are fairly optimistic. Less than 10 percent of retail property is vacant below Canal St., a number that rivals Midtown, which has a vacancy rate of less than seven percent, she said.
Consolo attributes failing businesses to the same troubles that plague small business owners everywhere in Manhattan: Sometimes there are old leases and they cant afford the new rent. Sometimes they lose their customer base. Sometimes the operation itself becomes tired.
William Barthman Jewelers on Broadway and Maiden Lane has rebounded to close to pre-9/11 sales, in large part because of Web site activity. The stores that are technically advanced in all facets of their business can benefit and will benefit more so than the person that is not in the 21st century, store manager Kopel said. Barthman has been selling jewels near Wall St. since 1884.
The city expects 30,000 new residents to move into the area below Canal St. in the next five years, and most of them will be moving into high-end condos and rentals. We service an underserved market, Dunne said of Butter and Eggs. This is an excellent neighborhood to be in.