The preservation of independent small businesses has been an ongoing and growing concern in our neighborhoods and city. This took on greater urgency during the pandemic, when so many establishments were forced to temporarily close or drastically adapt their operations. For an unfortunate number of businesses, the changes, combined with an adverse retail climate, led to their permanent closure. Some merchants found in the crisis an opportunity to go into long contemplated retirement. Over the past couple of years, we have heard from dozens of local businesses currently in operation that the effects of the pandemic are still among the biggest challenges they face. And yet, despite these obstacles, we have been pleased to welcome numerous new establishments to the neighborhood that feel good about their prospects. What to make of the current state of small businesses in the area?
To try to offer some insights, we teamed up with the East Village Community Coalition and Cooper Square Committee to undertake the first comprehensive storefront survey of the East Village since 2019, before the onset of the pandemic, when the Lower East Side Partnership performed a similar study. (click on image below)
Our survey, conducted in late 2021, covered 1,776 ground-floor commercial spaces in the area bounded by East 14th Street to the north, Houston Street to the south, Avenue D to the east, and Third Avenue and the Bowery to the west, noting any changes in vacancy status and in business occupancy, identifying formula retail establishments, and classifying all active storefronts by business category. We then analyzed the relationship between the data we gathered and landlord size. And finally, we complemented these findings with a survey aimed at gathering merchants’ thoughts concerning current business conditions and challenges.
The picture that emerges from the study is at once one of crisis and resilience — of, on the one hand, circumstances adverse enough to lead to a decline in businesses across several categories, and on the other, merchant collaborations, modified operations, and growth and expansion. Some of the major findings follow.
Storefront vacancies increased by 35% between 2019 and 2021. This is lower than the increase seen in Manhattan during this period; but the neighborhood’s vacancy rate, at 19%, still exceeds that of the borough. Vacancies tend to cluster, and the location of these clusters have remained relatively constant over the past two years (persistent ones include Avenue A between 2nd and 3rd Streets, and 438 East 12th Street). Moreover, of the vacancies we recorded in 2021, almost half were also vacant in 2019. Both new and persistent vacant properties tend to be disproportionately owned by medium to large landlords (i.e., landlords that own between 6 and 60 buildings).
More businesses closed than opened during the study period, as one would expect, given the increase in vacancy rate. That finding, however, obscures a more dynamic reality. While 336 businesses did close, 257 have opened.
In keeping with the anticipated impacts of the pandemic, the number of accommodation and food service establishments declined over twice as much as businesses in other categories, which remained fairly stable. Retail trade businesses, for instance, declined by only 2%.
A review of more detailed business categories reveals trends that also comport with the likely effect of public health mandates, the rise of remote work, and a desire for social distancing. Categories showing an overall decrease include dry cleaners, tailors, and tattoo shops, as well as, to a lesser extent, full-service restaurants (limited-service ones remained stable). Those showing an overall increase include liquor stores, bookstores, bike stores, pet-related businesses, and bodegas. Despite these changes in business composition, the hierarchy in the neighborhood among business categories remained mostly constant, with full-service restaurants, hair/nail salons, and bars and clubs, despite their contraction, remaining the most common types of retail establishments in the area.
In contemplating the greatest challenges they currently face, merchants mentioned rents, a lack of available skilled workers, and the cost of advertising. To overcome these challenges, they stress a need for support with leases, marketing costs, and access to financing. They further emphasize the role that merchant collaborations, public space enhancements, and sanitation improvements might play in supporting their businesses by making the neighborhood more attractive to visitors.
We conceived of this study first as a tool for understanding how the pandemic had affected storefronts in the East Village, and secondly as a baseline and template for subsequent iterations of the survey. The current data also lends itself to additional analysis. As a next step, we will be looking more closely at the relationship between formula retail and the various property attributes we studied. We welcome, however, suggestions of research questions that might help us devise ways to better address the challenges faced by small businesses in our neighborhoods — just email firstname.lastname@example.org
You can read the full report here.