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2nd Avenue Deli Heartbreak
By
Jen Chung
Published Jan 6, 2006
Modified Mar 7, 2008
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By
Jen Chung
Published Jan 6, 2006
Modified Mar 7, 2008
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A shuttered 2nd Avenue Deli was an unfamiliar site on an otherwise regular Thursday - except that people knew that owner Jack Lebewohl was engaged in a kind of protest against his new owners, Jonis Realty, over a $9,000 increase in rent to $33,000 per month. The NY Times sets up the situation as an inevitable turn of the real estate market, with some interesting details: Some sort of rent increase was part of a deal with the previous owners 15 years ago (!) - and Jonis apparenlty agreed to knock off $3,000 of the rent. Huh - if someone generates a model that can project, hmm, let's see, what an acceptable margin of profit would be, over 15 years, and see how that might offset a 25% increase in rent, with considerable new capital investments to make, taking into account inflation, wage issues, and price elasticity (or inelasticity), please tell us!
And the Daily News says Jonis bought many properties in the neighborhood for a total of $93 million and gives an example:
Across the street from the deli, Abitinos Pizzeria, which has the same landlord, celebrated its grand opening early last month. It closed three weeks later because its owners realized the foot traffic couldn't support the $14,000 a month rent.
This is a very complicated equation, the cost of doing business (rent, staff, supplies) and the cost of staying open, with lots of questions - should owners operate knowing they'll have to survive 25-40% rent hikes, being one. Will New York City be like some other cities, such as Tokyo and Hong Kong, where restaurants can no longer afford street level property and will move upstairs? Well, that might be unlikely given the city's strict zoning laws, but what else is there?
Lebewohl still hopes to work with Jonis, though he has been saying ominious things like, "If I don't get this resolved in x number of days, I'll vacate," as quoted in the Times (which added it was unclear what "x" was) and other papers. When Gothamist stopped by yesterday, we noticed with fresh eyes that there's a Dunkin' Donuts up the street, a gleaming North Fork bank directly across Second Avenue, and a Starbucks down the street. East Village, indeed.
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Jen Chung
Jen Chung is a former WNYC and Gothamist editor.
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