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Brooklyn councilmember talks details of commercial rent bill

Brooklyn's vacancy rate went from 4.3% to 5.1%, according to the report. Photo Credit: Jeff Bachner

Landlords have been rejecting the potential for a commercial rent regulation board, while some small businesses have been lining up in support. Councilmember Steve Levin, who filed the bill to create the board two years ago, is trying to push it through before the end of his term in two months. PoliticsNY spoke with the Councilmember to get a sense of what the bill is really about. 

After a hearing on Friday, Sept. 17, Levin told PoliticsNY that he is still hopeful. 

“This is nothing other than a level playing field when their lease expires,” Levin said. 

The bill creates a seven-member appointed commercial rent guidelines board, similar to the residential rent guidelines board, and it would annually establish guidelines for rent adjustments in commercial spaces.

Both Landlords and tenants have suffered during the pandemic, on the commercial and rental side. Job closures removed the ability for tenants to pay rent, and eviction moratoriums prohibited landlords from enforcing rent payments. 

One supporter, Natasha Amott, closed her Williamsburg business due to a rent increase, around the same time that Levin created the bill. Though she sees rents lowering during the pandemic, she knows it’s not something to count on. 

That’s what Levin says he is trying to address—the uncertainty, lack of flexibility and forethought businesses can have when their lease is up.

“Landlords will often give reduced rent, then increase as the business gets more successful, and makes capital improvements. They don’t want that to go away,” Levin said. 

“Commercial tenants have very little leverage in any negotiation,” he continued.

Amott said her main competition is national and multinational corporations, who are ready to pay a higher rent. Small businesses have different considerations. “If I had taken that rent increase at 44% it would be putting a cap on my staff’s wages,” Amott told Politics NY. 

She added that prices on her products at Whisk, her housewares store, would be priced higher. “Neither of those scenarios made me feel very good,” she said. 

The board Levin wants to create would create regulations for how much the rent can increase each year in commercial spots. 

Here’s how the residential guidelines process works now, for a glimpse into how the commercial one might fare:

The Rent Guidelines Board researches factors like current tax rates, operating costs, availability of financing, and the overall supply of housing and vacancy rates. Then, they hold meetings, hearings and voting meetings where they listen to the input of the public and experts in the industry. Then, they vote on the rent guidelines for leases.

“It doesn’t guarantee them the right to renew,” Levin clarifies. 

There are things that do work within the current framework, Levin says. “It’s a dynamic marketplace … They don’t want that to go away.”

The Real Estate Board of New York came out in opposition, telling The Real Deal that it would hurt property owners after they’ve already suffered through the pandemic. 

As long as vacancies are high, the property owners and the small business owners will be hurting. Office space and retail vacancies specifically reached a 30-year high this past May. Whether or not this trend continues is dependent on the negotiations the two make. 

 

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