While the New York City Council is certainly well intentioned when it proposes to assist small businesses with commercial rent control protection, many critics view the underlying policy rationale as terribly flawed.
“[City Council members] want to impose rent regulation for smaller retail, manufacturing and office spaces just as New York does for a third of the city’s housing stock,” opines Greg David, a columnist with Crain’s New York.
While set to assist small businesses that lease out less than 10,000 square feet, David notes his frustration with “how little council members understand the proposal’s consequences.” And according to David, the problem begins with the bill’s sponsor, Stephen Levin of Brooklyn. “There are a number of fundamental problems with Levin’s big idea and all similar policy concoctions.”
David believes that, if the law is passed, the quality of NYC’s buildings will deteriorate. “When taxes and mortgage obligations rise faster than rents, landlords have no choice but to cut back on maintenance of their properties,” he writes. And “capping off rents means owners have no incentive to improve their properties to attract tenants who can pay more.”
David also expressed concern that such a proposal would lead to a stunted economy. And that while small businesses might not be forced out, the neighborhoods they serve will suffer as a result – as stores will be unable to quickly adapt as local demographics, preferences, and affluence, shift.
“Meddling with a free-market economy is fraught with danger,” noted Jonathan H. Newman, a senior partner at Newman Ferrara LLP. “When government interferes with how rents are set, it inevitably, and adversely, effects the value of the impacted buildings,” he continued. “And when property values decline, so, too, does tax revenue."
"It's a vicious cycle that will likely leave all New Yorkers ‘holding the bag,’” he concluded.
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To view Mr. David’s column, please use this link: https://www.crainsnewyork.com/greg-david-new-york/neighborhoods-lose-if-commercial-rent-bill-passes
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