There’s No Substitute for Ownership
Errol T. Louis
The high (and rising) cost of renting store fronts present a serious obstacle to the success of many African-American businesses. No matter how successful a merchant may be, if he or she is renting space from a landlord, there is a real chance that the business could be thrown out on the street.
Unlike residential rents, commercial leases are not regulated or controlledCa landlord has the right to hike the rent as high as he or she wants at the end of a lease. A business can go from spending $1,000 a month for a storefront to spending $3,000. In commercially hot areas like Brooklyn=s Fort Greene and Harlem=s 125th Street, there are signs this has begun to happen. Some merchants have already been displaced; others are justifiably worried that they will be forced out in the near future, as rents suddenly skyrocket.
It=s hard not to view this development with mixed feelings. On the one hand, the rising rents signal that economic growth is taking place, bringing new jobs and new businesses to the neighborhood. On the other hand, you hate to see the little guy get squeezed out. In fact, the measure of economic recovery in parts of Harlem and Central Brooklyn could never have happened without the contribution of tenacious small merchants who fought for years to eke out tiny profits, long before the rest of the world rediscovered the potential of the inner city.
In some cases, the process is brutally direct. If the landlord happens to notice that a merchant is doing well, he or she may decide to increase the rent at the next lease renewal. Ironically, the squeeze this puts on small businesses can choke off the very process that make a commercial property valuable in the first place.
A number of smart entrepreneurs have gotten the message, and are actively looking for ways to buy property while it=s still affordable. At least one program is set up to help merchants buy commercial property. Neighborhood Housing Services of New York (NHS) has a program called StoreWorks that rehabilitates abandoned properties and provides financing to merchants who want to buy a building and operate a business out of it. Financing is more or less guaranteed if the merchant can come up with 20% of the purchase price. To find out more about the program, contact Peter Robbin of NHS at 212-645-6363.
For those unable to consider purchasing property, a short-term strategy might involve renting commercial space that has low, subsidized rents. In Bedford-Stuyvesant, about five newly-renovated storefronts are nearing completion along the stretch of Fulton Street from Classon Avenue to Bedford Avenue. The storefronts, owned by the nonprofit Pratt Area Community Council, are going for just $10 per square footCmuch less than the $13 to $17 that most landlords in the area are charging. For more information, call 718-522-2613.
The Brooklyn Navy Yard offers low rents, security and parking in a business-only environmentCdefinitely worth checking out if your business doesn=t require walk-in traffic from the general public. In Harlem, the Central Harlem Local Development Corp. has been working to spur development on Adam Clayton Powell, Jr. Blvd. north of 125th Street. Prices there are cheaper than on Lenox Avenue.
In the end there is no substitute for ownership, and merchants should continue looking for creative ways to pool capital in order to acquire commercial property in our communities.
The Family Store, which formerly operated an Afrocentric arts and gift shop, left its Atlantic Avenue location a few months ago and is considering whether or not to return to the same area in the near future. In the meantime, the company=s founders landed a major contract to design parts of the interior of the Benjamin Banneker High School in Fort Greene.
With February approaching, it=s time to start looking for the 1998 edition of The Big Black Book, the indispensable guide to black-owned businesses in the New York area, published by Celeste Morris. Check out the book=s web site at http://www.BigBlackBook.com
Send your questions and comments about business and/or economic development to Errol T. Louis c/o Our Time Press, 290 Grand Ave., Brooklyn