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The Metropolitan Transportation Authority (MTA) has made a significant move to help small New York businesses survive the pandemic. We reported earlier in the week at how Grand Central’s Dining Concourse (where the MTA is the landlord) had been decimated by COVID. This was amplified by the reopening and closure of the iconic Oyster Bar within a space of just 12 days. There was a call for fairer rent.
Today, the MTA reopened Turnstyle, the Underground Market at Columbus Circle, offering a model that gives vendors a new rent based on their income.
“The MTA is making it a priority to revitalize these stores and set them up for success. We’re doing this for the mom and pop shops that are the lifeblood of New York who through no fault of their own have been swept up in the pandemic,” said Janno Lieber, President of MTA Construction & Development. “We are developing a financial relief plan for our tenants that moves us from a fixed rent system based on their leases to a percentage rent system so that our interests are aligned. If they succeed, we just get a percentage of their revenue. We would put that in effect for the duration of the pandemic until ridership starts moving back to normal levels.”
The MTA made it clear that their new approach will not apply to national tenants like Starbucks, Apple, or banks but it will apply to the vast majority of their retail tenants, including the newsstands.
Lieber also flagged that they want to take this opportunity to expand their retail in the transport system. They will be developing an area at Port Authority Bus Terminal mezzanine at 8th Avenue similar to the Turnstyle project, but are well aware of the current challenges of low footfall. “The ultimate revival can’t really take place until riders start returning to our system in numbers. On a typical weekday last year, the station at Turnstyle had 240,000 riders. Now that number is more like 75,000. Our overall system-wide ridership on the subways is about 30% of where it was this time of year,” Lieber added.
“If the MTA does what they say, it will give us the peace of mind we need to go back to work and focus on saving our business,” said Nicolas Dutko, the founder of Tartinery that operates at Grand Central Terminal. “Frankly, a straight percentage rent deal is the only viable solution, especially in a place like Grand Central where we depend exclusively on commuters and tourists. None are back at the moment and no-one knows when they will be back. “
This move by the MTA was welcomed by other New York business owners, and is seen as a potential model for the future. “It’s what all landlords need to do right now for their tenants to survive,” said Nick Livanos whose family own restaurants Ousia, Oceana, and Molyvos in the city. “It should not be short term but a permanent lease term of how leases are structured going forward.”
“The MTA is helping us greatly,” said Evan Felman, the founder of Doughnuttery which has a shop at Turnstyle as well locations at Chelsea Market and the Plaza Hotel. “We want to work on percentage rents. When we make money, you make money, we can all be successful together.”
Matt Fox from Fine & Dandy appreciated landlords getting more imaginative: “If that arrangement works for some businesses, that’s great! The more options given to small business owners to try to make it work the better.”
“I think percentage rents are fairer than flat rents in some ways,” said Charlie Marshall of The Marshal.”However, not all small businesses are interested in having that kind of open-book relationship with their landlord.”
“The steps that the MTA is taking to work alongside their tenants versus against them are crucial to small business owners in New York City,” enthused Holly-Anne Devlin, founder of Hell’s Kitchen Neighborhood Action Committee. “Other landlords must absolutely follow suit in order for the beating heart of the boroughs — the mom and pop shops — to remain.”