Are High Rents Pricing Manhattan's High-End Restaurants Out of the Market?

Categories: Longform

danny-meyer-mid-80s.jpg
Courtesy Union Square Cafe
Here's how Danny Meyer found the storefront on East 16th Street in the mid '80s when he opened Union Square Cafe.
Celebrity chef Bobby Flay closed his Fifth Avenue restaurant Mesa Grill last year, laying to rest a landmark that, when it fired up its burners in 1991, was the only destination restaurant in an area dominated by garment factories.

In February, Keith McNally shuttered Pastis, a Meatpacking District institution, amid rumors that the building it inhabited was slated for renovation. He initially maintained he would reopen there, but now says he will have to relocate.

Wylie Dufresne will close wd~50 before the year is out, removing an internationally famed bastion of molecular gastronomy from the Lower East Side block it helped colonize.

union-square-cafe-2014.jpg
Robert Menzer
The Union Square Cafe today.
And late last month, Danny Meyer told the New York Times that he intends to close Union Square Cafe, a restaurant whose renown helped to revitalize the neighborhood from which it took its name when it opened on East 16th Street just west of the park in 1985.

All of these restaurants are victims of real estate changes they played a part in creating: All are either being forced out for redevelopment or discovering at the tail end of a long lease term that they can't afford the current market rent. And they almost certainly won't be the only ones to go. At the turn of this century, restaurant owners commonly signed 10-year leases with a five-year option tacked on. (Many still do.) That means many restaurants that signed leases between 1999 and 2004 will likely face the threat of extinction.

Given that New York City's current restaurant landscape is built on a foundation of institutions that opened during that era, an industry upheaval might be afoot. Just as distressed areas can engender bargains, spruced-up blocks can take them away.

"It's hard to come to grips with the notion that our success has, in part, contributed to our inability to remain in our neighborhood," Meyer wrote in a piece published on the Times' July 2 op-ed page. "There are neither victims nor villains in this story; no sympathy is being asked for, and no fingers are being pointed. But as a city, we've got a problem." (Parts of the op-ed didn't quite add up; for more on that, see "Danny Meyer's New York Times Op-Ed Proves Indigestible.")


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22 comments
David Betak
David Betak

Just a few years ago I had the same problem with living in the big apple. I have yet to recover from that problem! If some interesting NYC girl would adopt me --- that would be very helpful.

Kyle L. Wilson
Kyle L. Wilson

That's pretty much an allegory for American economics as a whole. It's what happens when the economy is driven by credit expansion.

Tricia McDermott
Tricia McDermott

sounds like what happened to the artists and actors too...

frosty.dufour
frosty.dufour

That area has been "union square" since about the 1960s -- that's why the subway station is called "Union Square." This area has got quite a lot of history behind it and naturally had both high and low points during it's over-200 year history, but it was never a no-man's land.

tbuontempo001
tbuontempo001

I guess now the 1% can experience the feeling of loss that results when market ecnomics takes over and destroys ours neighborhoods, communities and their dreams.  The Working Class experience this type of destruction of our social, economic, and cultural infrastructure all the time.


So to the 1%, welcome to the horrible feeling of loss that results from the terrorism of market economics. 

Grandpa
Grandpa

Sorry about that nasty comment... but my tongue was stuck against my cheek and I could do nothing to stop it! :)

scottilla
scottilla

 "The area had improved a bit by the time Meyer came along -- the neighborhood was no longer "full of communists,""


Now there's an oxymoron.

Grandpa
Grandpa

No, no, no... If you are high end, you need to pay your fair share. We now live in the Obamanation era. Get with the program!


pokechop
pokechop

Ari Ellis and all the other real estate scum are  money-grubbing low life.

Ed Rosado
Ed Rosado

G-D! please stay in Manhattan, you are part of the reason for the high rents. go away!

smooth.operator.nyc
smooth.operator.nyc

This is just the typical generational cycle of New York City, and how it has always been. I just feel bad for people who bought property in the last 5 years. They are all gonna take a bath when the real estate market crashes.

cformusic
cformusic

wow..oh well..out with the old in with the new..this is how NY has always been

JJnyc10006
JJnyc10006

Some restaurants spend over $100k/year on Opentable.  If restaurants could accept reservations online without having to pay a fee, they would be able to afford the rent.  It would save the larger, centrally located restaurants at least $2k/month and as much as $10k/month.   www.ReservationGenie.com is in over 100 restaurants.  Restaurants can utilize it on a free trial while they ween themselves off of Opentable's teet.

joe_dee
joe_dee

They are killing NYC. And when there's no more bars, and restaurants around because the people that work in them cant afford to live in any fairly habitable area, what are they going to do? How does your average fast food worker, or barista even live in NYC? Grocery cashier? Retail salesperson? This why the Chamber of Commerce wants amnesty, so they can stick newly arrived immigrants in these jobs, and they dont mind living 10 to an apartment in a part of NY no one else wants to live in.

Rapheal Crump
Rapheal Crump

everythings gonna be starbux and citi banks. Deserted streets. People are leaving NYC for easier better living else where

Ben Nycdivebars
Ben Nycdivebars

Stricter rent control laws need to be implemented for all businesses and residents. Otherwise, nyc will be facing nothing but vacancies and rising crime rates. It continues to get worse each year with more of my favorite joints closing all due to greedy landlords!!

Mark Laczynski
Mark Laczynski

It's not just restaurants. People will start leaving the city too.

jackiegee22
jackiegee22

@Grandpa  And whatever the situation, out come the Tea Baggers to blame it on President Obama, no matter how far the stretch - even if it's from the last century.


mattnelko
mattnelko

I disagree.  Rent control runs contrary to free enterprise, upon which this city has always been built.  Take away the incentive to make a profit and you get East Berlin.  No, the answer is tougher ZONING.  As explained in the article, the problem is that there are too many banks and chain establishments that can afford to pay impossible rents for marquee addresses (even operating at a loss at that branch, which they often do) because the corporation itself is so huge it can absorb the loss and operate that branch essentially as a loss leader).  Too many of these establishments artificially skews the "comps" upon which landlords base their rents.  Regulating the number of banks and Starbucks per neighborhood would certainly open up some retail space and force landlords to sign leases for the "next" highest bidders -- the mom and pop establishments that made New York ... New York.

mattnelko
mattnelko

They already have been.  All the "cool" places are now scattered along the Hudson River Valley towns.

jackiegee22
jackiegee22

@Grandpa @jackiegee22  Take your meds and go to bed now, Grandma.


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