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Creative solutions to skyrocketing rents

By Farnoosh Torabi | Special to amNewYork

July 9, 2006

Leonard Pfluger of Leonard Opticians, 40 West 55th St. in Manhattan. (Photo by Jefferson Siegel / July 9, 2006)

Wedding bells have been ringing in New York's small business world as retailers take on creative survival techniques in an uncompromising rental environment.

Keenan & Buck, which was previously located at 36 W. 44th St., is one recent example. In March, owner Leonard Pfluger got priced out of his 1,700-square-foot space and decided to relocate 10 blocks north -- to inside fellow eyeglass store Leonard Opticians on 40 West 55th St.

Pfluger took over the shop from his father in 1972, and for the next three decades expanded Keenan & Buck's reputation as a customer- focused business.

He locked in two long-term leases while at the 44th Street location.

But when the third round of negotiations came around earlier this year, Pfluger, 60, was told his rent would double to about $7,000 a month.

"We were at the apex of the [rental] market," Pfluger said. "I didn't want to take out another loan to help support my monthly payments."

Instead, Pfluger took out classified ads seeking a like-minded optician in midtown who would agree to let him move in for free in exchange for Keenan & Buck's customer base.

He talked to four different business owners before meeting with Arthur Leonard of Leonard Opticians. They hit it off immediately.

"The first thing out of [everyone else's] mouth was money," Pfluger said. "Arthur was the first to tell me how we should treat customers.

At that point, I shook his hand."

Pfluger had to give up his small staff of workers and his outdoor signage. He is now a salaried worker at Leonard Opticians. He also earns a percentage of sales.

The move-in, Pfluger says, has helped his financial situation -- and his stress level.

"This is a fine-tuned place," said Pfluger, sitting at his new desk in the roomy office area at Leonard Opticians. "There's an office manager, a store manager. It's a team. If the boss isn't here, things still get done."

The marriage reaps benefits for Leonard, too.

"We're adding to the bottom line without completely pushing the envelope in terms of overhead," Leonard said. "Our rent's the same, but now we're just seeing more people."

Pfluger figures he brought over at least 5,500 regular clients.

"It just doubles their opportunity for sales," said Faith Hope Consolo, a retail expert with Prudential Douglas Elliman.

Consolo has seen an increasing number of small businesses move in together over the past couple of years, including Fishs Eddy, which moved in with Gracious Home, and several handbag designers that have moved into clothing retailers like Searle and Scoop.

"As space becomes more expensive," she said, "retailers have to find alternatives to keep growing and doing business."

Keenan & Buck's phone number did not change with the move, which helped maintain customers. Some clients were inevitably lost during the transition, Pfluger said, but he's hoping a series of home mailings with Keenan & Buck's updated information will draw them back. Overall, Pfluger is confident he made the best move. His 90- year-old father agrees.

"[My dad] told me, 'Wherever you go, the customers will, too,'"

Pfluger said. "And if we just keep doing the good deeds, the money will follow."

Farnoosh Torabi is a video correspondent for Thestreet.com. amSmallBusiness@gmail.com.

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