President's Testimony on Regulation of Commercial Rent 9.17.21

September 17, 2021

Testimony submitted by Monica Blum, President of the Lincoln Square Business Improvement District, to the New York City Council Committee on Small Business regarding Int. 1796-2019 – Regulation of Commercial Rent.

Thank you to Chair Mark Gjonaj, Councilmember Levin, and members of the Committee on Small Business for the opportunity to submit testimony on behalf of the Lincoln Square Business Improvement District (BID) in relation to Int. 1796-2019 to create commercial rent control. We support the statement submitted on behalf of the NYC BID Association, but we would like to offer our own testimony in opposition of Int. 1796-2019.

This is a period of time when many commercial property owners have struggled to collect rents from commercial tenants for the last year and a half. Prior to the pandemic, retailers were already struggling with competition from e-commerce, which was exacerbated by the pandemic, and has resulted in a blight of vacant storefronts along commercial corridors throughout the City. Instituting another financial burden on property owners after a year and a half of economic hardship brought on by the pandemic risks causing irreparable harm to commercial corridors throughout the City, including Lincoln Square.

At the Lincoln Square BID, we have close working relationships with the property owners and commercial tenants in our district. In our experience, property owners want their tenants to stay and are willing to work with them to allow them to do so, especially during the pandemic. They do not want vacant storefronts and do not benefit from vacant retail spaces, but rather they understand the value that a vibrant retail mix brings to their tenants and the community at large.

Commercial rent regulation may cause property owners to become less flexible in accommodating their tenants in order to avoid locking in artificially low rents in the event of economic downturns such as the pandemic. The result would be the proliferation of vacant storefronts that would undercut our efforts to create a vibrant and dynamic streetscape in Lincoln Square. Commercial rent regulation will also incentivize property owners to rent to large, nationwide chains who are seen as more credit-worthy tenants rather than renting to small businesses.

I am also concerned that it is unclear how this legislation will impact spaces leased for pop-up retail businesses, where property owners may offer favorable lease terms in order to avoid the blight of retail vacancies while searching for long-term tenants. We have many such businesses in Lincoln Square and, as a result, we have a more active and vibrant streetscape. This bill may discourage property owners from offering these short- term leases, exacerbating the retail vacancy problems as our commercial corridors attempt to rebound from the devastation brought on by the pandemic.

Now is not the time to implement sweeping legislation that will drastically impact commercial corridors throughout the City while so much remains uncertain. Adding to the uncertainty, in a very short period of time, the rulemaking and appointments will be overseen by a new administration. Our neighborhood, in particular, which is home to Lincoln Center for the Performing Arts—the largest performing arts center in the world and the economic engine of Lincoln Square—is just beginning to open, and while we’re hopeful that it will have a positive impact, the future of retail remains very uncertain. Given the number of variables in the balance, now is not the time to impose additional burdens on property owners with this legislation.

I recommend that you and your colleagues explore more supportive measures to promote a vibrant commercial sector in the City that set both retailers and property owners up for success rather than asking private property owners to bear the financial burden alone. Int. 1796-2019 will do irreparable harm to commercial corridors like Lincoln Square.