Business | NPR

Small-Business Owners Are Scoring Dream Spots In The Most Cutthroat Market

There's a silver lining to all those empty storefronts in New York City: Some business owners are snagging prime Manhattan locations ahead of the great reopening.

Listen

Eli Sussman is counting on heavy foot traffic for the new location of his Mediterranean restaurant, Samesa, at Rockefeller Center in New York City.
Eli Sussman is counting on heavy foot traffic for the new location of his Mediterranean restaurant, Samesa, at Rockefeller Center in New York City. Camille Petersen

Eli Sussman never imagined he would be able to open a restaurant at 30 Rock — the heart of Manhattan and the location of Tina Fey's sitcom by the same name.

But he's done it.

His Mediterranean fast casual restaurant Samesa opened in Rockefeller Center in March. Before then, Samesa was on a residential side street in Williamsburg, Brooklyn.

"It's about as night and day as you can get," Sussman says.

Until now, getting a spot in Midtown Manhattan was too expensive and competitive — Sussman would be typically bidding against big chains.

But new leases and lease renewals are down nearly 60% in Manhattan since the early days of the pandemic, opening up new locations, according to the real estate services firm CBRE.

Samesa's Brooklyn location closed in September because of the pandemic. Sussman started eyeing new spaces with lots of foot traffic and office workers looking for a quick lunch.

For a fast casual restaurant such as Samesa, Midtown Manhattan is the ultimate dream location, he says.

And as New York City takes big steps toward reopening, with many COVID-19 capacity limits and restrictions lifted as of May 19, some business owners are taking advantage of a less cutthroat real estate market to get their dream spaces.

Sussman is paying more in rent at Rockefeller Center than in Brooklyn but expects he'll get more customers.

It's a significant bet. Rockefeller Center is still quiet, and small-business owners such as Sussman need office workers and tourists to come back soon.

"The amount of people that are going to walk by Samesa is so much exponentially greater than what was at my previous location. So I'm playing a bit of a long game here," Sussman says.

In Manhattan's trendy Meatpacking District, Jesse Dong is also betting on the city's recovery. He owns the clothing retailer Two Minds. The store opened a few weeks ago.

Dong lost his retail job during the pandemic and started thinking about opening his own store. He was riding his bike and saw an available storefront on his dream street. It has cobblestones and is near luxury shops such as Hermès and cultural attractions such as the Whitney Museum.

"We knew we had to move fast or it was going to slip through our fingers," he says.

Dong says it felt like if he waited to bid on the space, he'd be up against tenants with bigger names and more resources — so he signed a lease.

He says that puts him in a good position now that many COVID-19 restrictions have been lifted in New York.

Jesse Dong opened the clothing retailer Two Minds in Manhattan's Meatpacking District a few weeks ago. He considers it his dream space.
Jesse Dong opened the clothing retailer Two Minds in Manhattan's Meatpacking District a few weeks ago. He considers it his dream space. Camille Petersen

Mike Slattery, associate director of research at CBRE, warns tenants against expecting a huge rent bargain. It's still Manhattan.

He says this is the time for tenants to make decisions on new spaces. Over the last six months, there's been a 22% increase in the number of tenants looking at spaces — and that number keeps rising.

"The flow of tenants back into the market has actually started to spark bidding wars," Slattery says.

All these small-business owners will be hoping for the same thing: a return to the way things used to be, with people on shopping sprees or on their way to a towering holiday tree.

"We're open," Dong says about his clothing store. "And there seems to be a return to normalcy."

Copyright 2022 NPR. To see more, visit https://www.npr.org.

Transcript :

AILSA CHANG, HOST:

There's a silver lining to the many vacant storefronts throughout Manhattan. During the pandemic, rents have gone down, and available space keeps going up. As Camille Petersen reports, for some businesses, it's a chance to move into the location of their dreams.

CAMILLE PETERSEN, BYLINE: Normally in New York City's Rockefeller Center, it's hard to avoid jostling someone's shopping bag or elbowing them as you order food. Now, it feels pretty lonely inside Rockefeller Center. A few people walk through the hallway. Someone gets their shoes shined. But Eli Sussman is delighted to be here.

ELI SUSSMAN: I probably never would have imagined being in 30 Rock.

PETERSEN: Sussman is the owner of Samesa, a Mediterranean fast casual restaurant that opened here in March. Samesa's original location was on a residential side street in Williamsburg, Brooklyn.

SUSSMAN: It's about as night and day as you can get.

PETERSEN: The Brooklyn location closed in September because of the pandemic, so Sussman started looking for new spaces, ones with lots of foot traffic and office workers looking to grab a quick lunch.

SUSSMAN: Every fast casual concept, like, the Mecca is Midtown.

PETERSEN: Until now, getting a spot in Midtown was too expensive and competitive. He'd be bidding against big chains. But new leases and lease renewals are down nearly 60% since the early days of the pandemic. Sussman is paying more on rent in Rockefeller Center, but expects a lot more customers here. It's quiet now, but he's betting that will change as offices reopen and tourists return.

SUSSMAN: The amount of people that are going to walk by Samesa is so much exponentially greater than what was at my previous location. So I'm playing a bit of a long game here.

PETERSEN: In Manhattan's trendy Meatpacking District, Jesse Dong is also betting on the city's recovery. He owns the clothing retailer Two Minds. The store opened a few weeks ago.

JESSE DONG: I think there's a lot of people like, are you actually going to open a retail store when the retail apocalypse is currently happening?

PETERSEN: Dong lost his retail job during the pandemic and started thinking about opening his own store. He was riding his bike and saw an available storefront on his dream street. It has cobblestones and is near luxury shops like Hermes and cultural attractions like the Whitney Museum.

DONG: We knew we had to move fast or it was going to slip through our fingers.

PETERSEN: Dong says it felt like if he waited to bid on the space, he'd be up against tenants with bigger names and more money, so he signed a lease. He says that puts him in a good position now that New York City has lifted many COVID-19 restrictions.

DONG: Because now we're open, and there seems to be a return to normalcy.

PETERSEN: Mike Slattery, the associate director of research at the real estate firm CBRE, warns tenants against expecting a huge rent bargain. It's still Manhattan.

MIKE SLATTERY: There's a lot of tenants who are looking for the deal of the century, folks who submit very lowball offers with - you know, hoping on a wing and a prayer that someone will accept it.

PETERSEN: Chances are they won't. And Slattery says this is the time for tenants to make decisions on new spaces. Over the last six months, there's been a 22% increase in the number of tenants looking at spaces. That number keeps rising.

SLATTERY: The flow of tenants back into the market has actually started to spark bidding wars.

PETERSEN: The business owners who win those wars or who just signed new Manhattan leases, like Eli Sussman and Jesse Dong, are taking a big risk. For their bets to pay off, they need office workers and tourists to come back soon to jostle through Rockefeller Center on a lunch break or on their way to a towering Christmas tree.

For NPR News, I'm Camille Petersen in New York.

(SOUNDBITE OF FKJ'S "BETTER GIVE UP") Transcript provided by NPR, Copyright NPR.