To Diversify Manhattan’s Retail, Free the Side Streets

Over the past few years, the public outcry over the perceived loss of New York City’s small and funky retail establishments has reached a fever pitch. Pseudonymous blogger Jeremiah Moss has chronicled it in his ongoing jeremiad, and even conservative commentator Nicole Gelinas bemoans the perceived bankification of her neighborhood, Midtown West.

First of all, the decline of New York City’s independent businesses is hugely overblown. According to the 2014 edition of the Center for an Urban Future’s annual State of the Chains report, the city has fewer than 7,500 chain storefronts spread among its 265 million square feet of retail space, with some of the most chain-heavy zip codes being home to outer borough malls.

And what little homogenization of retail there is outside of the city’s hottest shopping districts – entirely a Manhattan-centric phenomenon – is due largely to supply constraints.

Unlike housing, there is no government-supported retail sector – no retail rent control, no non-profit retail co-ops, no government agencies propping up the industry. Small retail business owners must depend entirely on market forces if they want more affordable space.

Traditionally, when demand for retail rose beyond what existing storefronts could handle, the escape valve was brownstones and tenements. Ground-floor apartments were vacated to make room for more small stores, sometimes on side streets, where rents are cheaper. The process has not always been welcomed by wealthy residents, but if 19th century New Yorkers had been able to exclude retail in residential neighborhoods the way planners and politicians do today, Battery Park would still be lined with single-family homes.

But since the 1961 zoning code was imposed, planners have halted the spread of retail, choking off the traditional escape valve of side street retail. In Manhattan’s residential neighborhoods, planners and politicians have slavishly clung to the traditional model of retail only on the north-south avenues. Not only is this inadequate for the city’s current retail needs, but it’s inadequate even to accommodate retail space that has existed for generations.

So-called nonconforming retail – storefronts in purely residential zones, grandfathered in under the 1961 zoning code – litters the neighborhoods just below 14th Street.

Beyond the avenue corners, storefronts along the entire length of St. Mark’s Place are nonconforming. Hundreds of businesses throughout the East Village would not exist if today’s politicians and planners had their way.

The South Village would be decommercialized, and mid-block storefronts on Christopher Street and across the West Village would vanish if they had to abide by the zoning code.

Farther uptown, a new residential tower on York and East 74th Street will have nothing but a garage and tenant amenities on the ground floor, in place of what used to be a restaurant and bar, pharmacy and nail salon. Despite being a very wide avenue in the country’s most densely populated neighborhood, York Avenue is not zoned for retail.

The alternative to allowing the market-led expansion of retail is micromanaging the storefronts allowed on increasingly crowded avenues. This, however, runs the risk of encouraging inefficient retail, even harming those who make the least.

Commercial rent control is an oft-cited demand from those who bemoan the city’s changing retail landscape, but regulating retail rents is unpopular with all but the far left, and has no realistic chance of passing. Even small business owners are far wealthier than most New York City tenants, and they sell goods out of their spaces at unregulated prices.

A more likely tactic is to regulate what businesses can open up in residential Manhattan neighborhoods that are perceived as besieged by chains.

The test was on the Upper West Side, where rules prevent banks and other retail establishments from taking up more than a certain amount of frontage on the three commercially zoned avenues.

The rules were driven by the perception that the banks locate not out of need, but for – well, it’s unclear. Gelinas summed up the sentiment of well-heeled Manhattanites who do most of their banking online, writing in a parenthetical, “When was the last time you stepped inside a bank?”

For Upper West Siders in search of a bank teller, the rules might mean getting off a stop early and walking a few blocks to an existing branch, or remembering to do their banking on their lunch break in Midtown. For the legions of service sector workers from poorer neighborhoods without banks and no-fee ATMs (there isn’t so much as a Wells Fargo ATM in all of Brooklyn), who work irregular hours with long commutes and may not be as comfortable with online banking, not having a bank when you need one is much more onerous.

But for some, this isn’t enough. One group in the East Village wants the city to explicitly ban some chains, modeled on San Francisco’s anti-“formula retail” regulations.

Those, however, have attracted the ire of the Rev. Arnold Townsend, vice president of San Francisco’s NAACP chapter. “If I go in and out of shops on upper Fillmore I’ll be lucky to find three or four African Americans working,” he told the San Francisco Chronicle, “and they’ll be at Walgreens or Starbucks.” (Bank branches, it should be noted, often employ people of color in Manhattan, and pay much better than Walgreens and Starbucks.)

The march of banks and chains up Broadway may be disconcerting to some of the city’s well-heeled suburban transplants in search of “authenticity,” but it’s a minor inconvenience for those in search of artisanal cheese and handmade baby toy stores. The problem could be alleviated by zoning for retail on the side streets and non-retailed avenues like West End.

And for those who are still not satisfied with their independent retail options, there’s always Brooklyn and Queens.

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