CLOSED FOR BUSINESS

EVER WONDER HOW MANY UPPER EAST SIDE STORES ARE CLOSED THESE DAYS? WE DECIDED TO FIND OUT.

By Adam Bloch

“Store For Rent” … “Retail Space Available” … “Lease Ending.”
Walking around the Upper East Side these days, they are impossible to miss—signs not only advertising the commercial space of empty storefronts, but also indicating the effects of a flagging economy. And there seem to be more of them than ever.
“Businesses are struggling in our neighborhood and all around the city,” said East Side Council Member Dan Garodnick, who also urged residents to buy at locally owned stores rather than at chains. “This is the result at a local level of a worldwide economic collapse, so it is not a surprise. That being said, you hate to see empty storefronts or local businesses failing. We need to support them more than ever.”
While the economy certainly is playing a role, the results of a recent Our Town   analysis indicate that constantly escalating rents are also to blame for the struggles of various stores.

Precision, on Third Avenue between 60th and 61st streets, was supposed to close at the end of February, but its landlord could not find a replacement. Photo By: Andrew Schwartz

To find out how the economic downturn is affecting local businesses, Our Town conducted a survey between Feb. 28 and March 5 covering York Avenue from 60th to 92nd streets, and First, Second, Third, Lexington and Madison avenues from 59th to 96th streets. We discovered 175 vacant, on-the-avenue stores. Eight more had announced their impending closure, while 10 others were shuttered but planned to open with new shops in the months ahead. Overall, 8.02 percent of stores on the six avenues were empty, though York, which is clearly doing better by far than its neighbors, skewed the results a bit. Stores on that avenue are a bit more isolated and benefit from a less overwhelmingly retailer-dominated area. Discounting York’s data, the closure rate for the Upper East Side rises to 9.27 percent.
“The East Side is kind of over-stored,” said Rafe Evans, a commercial real estate broker at Walker Malloy & Company. “It has eight avenues and all but Park and Fifth have retail. The adjustment to this new economy may end up being a little disruptive.”
At Precision, a women’s clothing boutique at Third Avenue between 60th and 61st streets, an employee who asked not to be named because she was speaking without her boss’ approval, clearly identified the twin problems facing her store and other like it: high rents and slumping sales.
“It’s terrible,” she said. “This past week has been worse than three weeks ago. It just keeps getting worse and worse every day.”
Precision was supposed to close at the end of February, but its landlord could not find a replacement, so for the moment it drifts along in a sort of retail purgatory, clearing away inventory with large discounts. The current rent is $27,000 per month, and the employee said sales have fallen 30 to 50 percent.
“We can’t do those numbers anymore,” she said, emphasizing that smaller retailers like Precision are getting hit hardest. “You can go to H&M and get whatever you need there. You don’t have the customer service, you don’t have that aspect anymore, but you’re saving yourself money. [Smaller stores] are getting hit hard. I can’t compete with Bloomingdales. They can just dump their merchandise at lower prices than we can.”
Precision, though, has three other locations on Third Avenue that remain open. Overall, most retailers interviewed said the problem stemmed more from high rents than from poor sales. Many said that they enjoyed great customer loyalty and support thanks to the Upper East Side’s affluence.
“We’re a luxury retailer, so clients are a little scared of buying in mind of what’s to come for the economy. But we’re on the Upper East Side, so we have a very good clientele,” said Stephen Viccario, of Viccario Fine Jewelers at Lexington and 61st Street.
His store is advertising sales of up to 70 percent off due to the economic crisis.

Christina Borg antiques, on Lexington Avenue between 74th and 75th streets, lost its lease and prepares to close. Photo By: Andrew Schwartz

“The truth of the matter is that wherever you go, you feel the pinch,” he said.
Even with a relatively wealthy local populace, many businesses complain that sale volume isn’t high enough to meet rent demands.
“Tenants are always looking for cheaper space,” Evans said. “That is a perennial and time-honored economic migration. The problem comes when there’s a disconnect between landlord expectations and requirements, and what retailers can bear. Right now we have a disconnect. The business that’s being done in many stores doesn’t seem to be able to sustain the rents. We’re all hoping it’s temporary.”
So do many retailers. In the meantime, many are looking for smaller and cheaper spaces or are trying to renegotiate leases.
“The rent is crippling. There’s no two ways about it,” said Malvina Solomon, who owns a store named after herself that sells pottery and jewelry on Lexington between 73rd and 74th. “We’re very reasonably priced, and generally speaking we’ve got a nice following. Every year, [my landlord] jacks the rent up, so that makes it hard.”
Solomon, who has been in business for 30 years on the Upper East Side, is also leasing month to month while looking for a new location. Irene Berlavski, meanwhile, is getting ready to shut down her outpost of Zig Zag Jewelry Designs on Third between 76th and 77th. Several years ago, she had three locations for her business, but will be down to one on Madison and 75th after the Third Avenue shop closes. Berlavski said her lease was up and it didn’t make sense to renew at a doubled price.
For small, independent retailers like Karin Alexis, who shut down her eponymous store for children’s clothing on Lexington between 82nd and 83rd several months ago, the actions of property owners are mysterious. She was forced to vacate and become an online-only operation (www.karinalexis.com) because of a combination of a high rent and poor sales.
“Obviously, the economy is terrible and the landlords are unwilling to make concessions on the rent, which was high to begin with,” she said. “We’ve all been battling high rents for years. This has been a problem for at least 10 years: The rents being out of line with retail sales. We asked our landlord to reduce the rent even temporarily. We made the decision that it didn’t make any sense anymore. I have a bit of a sentimental attachment to bricks and mortar retail, but it’s almost unfeasible to have a small business in New York City anymore.”

A condemned building near 62nd Street on Second Avenue holds four of the 13 empty lots between 60th and 67th streets. Photo by: Andrew Schwartz

On Madison, the travails of some luxury retailers are drawing attention. The avenue averages one closed shop per street between 59th and 81st. High-end brands such as Ghurka, Vicomte Arthur, Searle and Luca Luca have closed stores along this stretch (although Searle and Luca Luca have other Madison Avenue outposts). But overall, Madison has an average closure rate of 8.99 percent—higher than First and Lexington, but lower than Second and Third.
“I would not say that there are more businesses that are closing,” said Matthew Bauer, president of the Madison Avenue Business Improvement District, which covers the area from 57th to 86th streets. “There is some degree of consolidation, and there is movement throughout the district. Businesses are moving from one location to another. Many of the leases that were signed in the late ’90s are coming to fruition right now. You’re seeing stores that are moving to spaces that meet their needs. In the luxury marketplace, you’re seeing some brands that are ceasing their retail operations, and obviously that affects us to some degree. On the other hand, new businesses are coming to us.”
To be sure, Madison remains desirable to many luxury brands as a location to establish flagship outlets. Hermes, for example, is planning to open a new store in the space vacated by Luca Luca, and Nanette Lepore is opening shop between 74th and 75th streets.
“All retailers in this economy are understandably cautious,” Bauer said, adding, “as a luxury shopping district, Madison Avenue is still able to its core to meet the needs of its local community.”
Meanwhile, Second and Third avenues both have more than a tenth of their lots standing unoccupied. There are some notable trouble spots: 10 closed stores between 74th and 80th streets on Third; 13 empty lots on Second between 60th and 67th (four of them are in a condemned building at near 62nd Street) and 10 vacant shops on Second between 81st and 86th.
Many businesses are feeling the effects of ongoing construction related to the Second Avenue subway, which has compounded problems by disrupting foot traffic. Rainbow Hardware on Second between 93rd and 94th, for example, is preparing to close in order to make way for a new station.

By the Numbers Madison: 394 stores open, 33 closed, 6 opening, 1 closing, 8.99% closure rate Lexington: 440 stores open, 22 closed, 2 opening, 2 closing, 5.15% closure rate Third: 346 stores open, 39 closed, 1 opening, 3 closing, 10.28% closure rate Second: 399 stores open, 47 closed, 1 opening, 2 closing, 10.69% closure rate First: 387 stores open, 31 closed, 7.42% closure rate York: 148 stores open, 3 closed, 1.99% closure rate TOTAL: 2,114 stores open, 175 closed, 10 opening, 8 closing, 8.02% closure rate

Also notable is the increasing number of signs advertising heavy sales or layaway options. Many of the offers are simply winter clearances, but the proliferation and size of some of the discounts are unusual. Layaway, on the other hand, had almost entirely vanished as a purchasing choice until recently, but several stores, such as Viccario Fine Jewelry, have made it available.
Overall, the impression along most of the retail avenues on the Upper East Side is not one of economic disruption as much as a readjustment to a changed marketplace. Some businesses are undoubtedly failing and others have gone under and closed shop, but the majority are struggling along, looking for better leases and other ways to eke by until prosperity returns.
“I think the whole city, no matter what neighborhood you live in, is experiencing this downturn in some form or fashion,” said East Side Council Member Jessica Lappin. “At the end of the day, I believe that we’re going to emerge from this stronger than ever because we don’t really have any other choice. Certainly, it’s painful to see local neighborhood places go out of business, but my hope is that those that do will be replaced by the sort of stores that will be cherished for the next 25 years.”

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