Historical Commercial Rent Controls in New York City

By Brian J. Pape, AIA

449 BROADWAY: 22 months after being required to advertise for manufacturing tenants at a redetermined rate of $80 PSF, a special permit for retail tenants was ranted at 449 Broadway. Photo by Brian J. Pape.

Contrary to common belief, there is still rent control for historic commercial buildings in New York City, as was reported at a recent Community Board 2 (CB2) meeting.
Under discussion were applications for variances to allow Group 6 ground floor and cellar uses in the SoHo-Cast Iron Historic District, both within M1-5B zoning. Owners can choose to obtain a special permit from the New York City Department of City Planning (DCP), or apply for a variance through the DCP’s Board of Standards and Appeals (BSA).
The first application was for 47 Greene Street, a six-story building, which contained a store and industrial lofts. Although occupied for the last 30 years through various commercial uses, the current retail clothing store use is illegal and therefore requires the variance application. Almost all ground floor spaces in the neighborhood have retail uses. This building has no loading dock or truck door, and the small size makes it obsolete for manufacturing use. The CB2 approved the application to legalize the clothing store, conditioned on several limitations: There must be no drinking or eating establishments and tenants must qualify for membership in the SoHo Design District organization.
The second application was for a special DCP permit for 449 Broadway, a five-story building with office space on the upper floors. Similar in floor size to 47 Greene Street (about 4,000 square feet), this owner’s choice meant that they had to advertise for manufacturing tenants for a full year, at a predetermined rate of $80 per square foot (PSF) for both cellar and ground floor areas! They started the process in October 2015 and then had to restart in March 2016. Of course, they were unsuccessful at these rates; the space remained empty and still has no Certificate of Occupancy!
Even the City Planning Commissioners, the Manhattan Borough President, and CB2 members considered the range of $70 to $80 PSF to be excessive, and that such rates should not be applied to cellars. They noted similar difficulties in trying to get manufacturing uses for 462 Broadway as well as for 357, 359, and 361 Canal Street at these rates.
The CB2 approved the application for this special permit, with the caveat that the DCP needs to overhaul its outdated ‘good faith marketing’ program and its formula for determining commercial rental rates.
It may come as a surprise that at a time when the City needs rent controls to preserve the unique character of small businesses in commercial areas, we have agencies that seem determined to prohibit affordable rates, even if landlords may favor them!

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