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New York Blues
Blue Model Driving NYC Bookstores over the Edge

Bookstores across the country have already been backed to the edge of the cliff by Amazon, but in New York City they face yet another burden: high rent. The New York Times reports that the number of bookstores in the Big Apple fell by 30 percent between 2000 and 2012:

When Sarah McNally, the owner of McNally Jackson bookstore in Lower Manhattan, set out to open a second location, she went to a neighborhood with a sterling literary reputation, the home turf of writers from Edgar Allan Poe to Nora Ephron: the Upper West Side.

She was stopped by the skyscraper-high rents.

“They were unsustainable,” Ms. McNally said. “Small spaces for $40,000 or more each month. It was so disheartening.”

High rent has been driving businesses of all kinds out of the city, but touch the bookstores, and a certain kind of New York Times writer really begins to feel the sting, we suppose.
Why is rent so high in New York City? Part of it is natural market forces—companies competing for hot properties in a city with limited space. But part of the blame also goes to policy. Josh Barro had an excellent piece last year explaining some of the bad policies responsible for New York’s sky high rents: rent control, poor zoning policy, property taxes, high construction costs, and the like. Some of these are specific to the housing market, but others apply to retail rents as well.
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  • Thirdsyphon

    I’m not sure why this is a “Blue Model problem” unless one associates the Blue Model with technological progress and prosperity. Rents are high in New York City because the city is prosperous and consequently retail space is very much in demand. Add to that a market shift in favor of digital media and away from paper books, and you have a “perfect storm” of economic headwinds afflicting traditional bookstores. . . but so what? A survey of record stores and VCR rental establishments in New York City would show an even more precipitous decline over the same timeframe caused by exactly the same combination of disruptive technology and sky-high real estate prices. Most of us would simply call this progress and move on.

    • Pete

      “Rents are high in New York City because the city is thriving and consequently retail space is very much in demand. ”

      No, rents are high in Manhattan because of rent control, suffocating regulations, labor unions, and an anti-development attitude by much of the ruling class. Oh yes, and graft by city inspectors also drives up the cost of doing business in the city .

      The artificially constricted supply drives the rents higher than they should be.

      • Thirdsyphon

        Although the issues you cite are all (to some extent) real, none of them apply to commercial retail space.

        -Rent control only covers residential property. The law doesn’t apply to commercial retail space.

        -The city’s ordinances regarding construction standards, fire safety, elevator inspections, electrical wiring, dangerous substances, and various other topics might well seem unduly intrusive (or even suffocating) to people who live in other environments, New York is a hyperdense layer cake of massive skyscrapers laid over about 16 levels of gas mains, water mains, electrical lines, subway tunnels, and miscellaneous underground vaults, much of which is over a century old. That’s why (for example) our local K-Marts aren’t allowed to stock propane tanks. Many laws that would be absurd in Belfry, Montana (Pop. 271) are vital necessities in New York City, New York (Pop. 8,337,000). This should not surprise you.

        -Labor unions and anti-development folks might do a lot to raise the cost of putting up new buildings (and thus, indirectly, the cost of renting space in them), but storefronts are on the first floor of just about every building I’m aware of, and not even the most hardcore of anti-development groups are opposed to building first floors. What actually limits NYC’s storefront space is the physical supply of linear feet of space on New York City’s major avenues. That’s certainly a constraint, but there’s nothing artificial about it.

        • Corlyss

          Isn’t the hyper density strictly characteristic of only Manhattan, not the other 4 boroughs?

          • Thirdsyphon

            Yes and no. There are parts of the outer boroughs, like downtown Brooklyn, that rival the business districts of Manhattan in terms of density; but there are also large swaths of Manhattan, like the East Village, that are filled with low-rise buildings less than 7 or 8 stories tall.

          • Corlyss

            I got lost in Yonkers 13 years ago, and I ventured into Brooklyn for a G&S performance more years ago than I can remember. I admit when I’m in NYC, I stay in Manhattan and rarely make it out of the Cloisters to see anything else. My visits are so rare, I sate myself on what I most want to see in the smorgasbord of offerings.

          • Thirdsyphon

            I understand. That sounds very much like my own relationship with London. I go there once a decade or so to see specific events or visit specific people, and when I’m not engaged with them, I almost never get off the well-worn paths frequented by my fellow American tourists, mostly because there are so many unmissable, four-star Michelin attractions to take in that it would be senseless for me to wander off in search of just about anything else.

            I get lost in Yonkers pretty much every time I go there, but then again I usually wind up in Yonkers because I’m already lost. You’d think that four years at a college on the outskirts of Yonkers would be enough for me to learn my way around, but no.

          • Corlyss

            “I get lost in Yonkers pretty much every time I go there, but then again I usually wind up in Yonkers because I’m already lost.”

            LOL I recall that was my basic problem too. I took a wrong exit while listening to a Jewish or Italian radio program, and wandered around trying to find how to get back to the freeway, and then I got loster. I was almost an hour getting out of there.

  • Corlyss

    That has got to be way down on the list of reasons brick and mortar bookstores are struggling. Failure to revise their business model in the face of the Amazon and digital books tsunami that is destroying the footdragging industry at large has got to be 80% of their problems. Some bookstores like Politics & Prose and others that have capitalized on the stores’ other services and amenities.

    • Thirdsyphon

      Exactly. Adapt or perish. However one might feel about the Blue Social Model, I think we can all agree that it can’t be the source of every problem for every person every time.

  • richfam

    Bookstore, frozen yogurt or a two bedroom – the blue model is limit supply and the rent is too dame high

  • Jim__L

    Urbanism is what is driving bookstores over the edge, and everyone else for that matter.

    Banks want to drive property prices up, so they (rationally, if toxically) use their leverage over financing to manipulate landlords into charging ever-higher rents, and manipulate companies into locating in already-overcrowded areas.

    Break up banks, discontinue urbanism, and you’ll see a lot of companies and households flourish because their rent payments fall.

    The rent-seekers don’t want this to happen, so they also use regulatory capture to put their interests ahead of everyone else’s.

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