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While New York’s bars and restaurants pivot, innovate, and scrape to make a living, their landlords are refusing to budge. Seventy-one percent of landlords would not waive portions of rent due to COVID-19, 61 percent would not defer rent payments, and 90 percent of landlords would not formally renegotiate leases according to a survey released today by the NYC Hospitality Alliance.
Nearly 500 business owners responded to the survey and confirmed that an increasing number of them could not make rent in July. Eighty-three percent of bars and restaurants could not pay full rent last month, with 37% paying no rent at all.
The Alliance’s executive director, Andrew Rigie, said: “Restaurants and nightlife venues are essential to the economic and social fabric of our city, but they are struggling to survive and without immediate and sweeping relief, so many will be forced to close permanently.”
Indoor dining service is still on pause, with few signs from Governor Cuomo that that will change anytime soon. Outdoor dining service has progressed, with over 9,000 establishments now open. However, this is still not anywhere near generating sufficient revenue to cover rent and other expenses.
There was some good news for owners today who have invested in moving their businesses outdoors this summer. Mayor de Blasio announced this morning that outdoor dining will return in 2021. He set June 1 as the date for the return, while adding that the city will consider restarting it in the spring next year.
UPDATE. We spoke with Hell’s Kitchen business owners this evening. This is what they had to say…
Local bar and restaurant owners echoed the uncertainty of the situation. Even the landlords that are talking don’t seem to be that straightforward.
Pat Hughes, who owns Hellcat Annie’s and Scruffy Duffy’s (and handed back the keys to Lansdowne Road at the start of the pandemic) told us: “There are many small business landlords giving tenants breaks such as ‘just pay me what you can’ but refusing to put the offer in writing so that they can try and claw back what is owed at a later date.”
This view is reflected along 10th Ave. “Back in March, my landlord’s assistant said ‘pay whatever you can, even if it’s partial. The landlord will waive all late fees during this time’,” said Abel Castro from Ñaño Ecuadorian Kitchen, adding: “He hasn’t waived or discounted my rent. I contacted the office last month but I have not heard a peep.”
Many understand the challenges that landlords face. “Clearly, both tenant and landlord are in the same predicament of where they can earn money,” said Beth Sheinis from Hourglass Tavern and Betti Bar on Restaurant Row. “For those of us with minute spaces that will not support half capacity to even cover the payroll, that option leaves the indoor dining option a moot point. Without the 80% of our customer base who are either theater goers or theater workers being unemployed or wisely fearful of travel, the income simply isn’t there.”
Beth continued: “Many of us cover the property taxes in our lease agreements. Without tax forgiveness, both landlords and tenants are pressured, unable to raise the funds and both remain broke. And without property taxes, city services greatly suffer.”
“I feel that COVID is a tough spot to be for both businesses and building owners who need to pay others as well,” Ted Arenas from Rise Bar on 9th Ave told us. “I do appreciate de Blasio opening of outdoors for 2021, but many of the businesses will be closed by then and need a solution now. The outdoor seating isn’t allowing us to make enough money to pay rent. We have limited hours and it’s very weather dependent – if it’s too hot or rainy, we lose business.”
During the pandemic, Erol Zeren from Kahve has had to deal with a flood, a smashed-up door and a co-op board: “Our landlord at 9th Ave was very nice to us, especially during during the start of the pandemic. They didn’t charge us at first. Once we had a flood, we asked them about a rent negotiation and they took it to the board, since it’s a co-op. They declined. Since business is less than 70%, we couldn’t afford to stay there. After the front door was smashed at 10th Ave, things were not so nice with the landlord. We offered to pay them some money, what we could afford, but they told us to leave and are still trying to get money.”
Luckily, Paul McCoy from Jasper’s and McCoys came to Kahve’s rescue. “We’ve taken over his coffee shop on W51st St. He’s given us a rent which is affordable now. Thank you so much, Paul!”
“Some landlords are willing to work with you, some aren’t,” says Sean Hayden, owner/partner at Jasper’s Taphouse and Kitchen, and four other bars including Alfie’s, McCoy’s, Dalton’s, and Valerie in Midtown. “It’s hard to make a deal because the landlords are kicking the can down the road, waiting to see what’s going to happen. Until we get the vaccine, the best thing would be a deal that is a percentage rent based on your level of business.”
Corey Samuels at Kashkaval Garden is hopeful, but concerned at the level of property taxes: “We are negotiating with our landlord in good faith, and trying to come up with something that will both sustain Kashkaval Garden and our landlord’s ability to maintain their property through the difficult times up to now, and ahead of us. There has been no relief from the City for real estate taxes that our landlord owes (and us, as tenants, by extension), and those taxes have gone up 100% since 2012. Yes 100% in eight years, if you can believe it.”
“My proposal to the landlord is to pay April, May, June at the end of the lease and then pay 50% from July till January 2021. Having been closed almost five months, it’s impossible to pay the rent. Even 50% is a lot,” said Daniele Kucera from Etcetera Etcetera on W44th St. “Meanwhile, the landlords have to get a break from the real estate taxes, which are exorbitantly high. If they get a break, we’ll be able to get lower rents and possibly survive.”
Noelia Ostos at FusionHK Bar & Grill on 10th Ave is feeling the strain: “I am trying to renegotiate my lease with the landlord, but he insists that he can’t waive anything because he hasn’t received any stimulus help from the government. As a good tenant, I do want to pay him something, but landlords should be more flexible and humanitarian. It’s not fair that I have to work just for them and not have enough income for my family.”
Back to Pat Hughes: “I am convinced that the landlords will not budge until the businesses permanently close. They will feel the pain when they are trying to rent at pre-pandemic prices and there are no takers … and then when the economy falls off the cliff, look out below. NYC is toast.”
Finally, thanks to all those business owners who continue to share their views and struggles (and enthusiasm to survive this) with us. As Charlie Marshal from The Marshal told us: “We’re still in negotiations, so I probably shouldn’t comment – you can quote me on that.”