Second Avenue Businesses Face New Challenges

When the Second Avenue subway opened on New Year's Day, few people were happier than the owners of small businesses along the Upper East Side corridor. Second Avenue retailers endured nearly a decade of disruptions during the construction of the line's three new subway stations, as street closures, obstructed sidewalks and incessant noise inhibited pedestrian traffic and sales. But if the new subway line brings an anticipated increase in commercial rents, many small business owners fear they won't necessarily be better off now that the Q train is finally running.

For 27 years, Caryn Klauser has owned Promises Fulfilled, a children's store on Second Avenue between 82nd and 83rd Streets on Second Avenue that specializes in personalized toys and accessories. Access to her storefront was blocked by barricades and trailers for years during the subway's construction, which she said impacted her business “terribly.” Business owners were left to fend for themselves, Klausner said. “There was really no one to help us.”

Klausner, like many of her neighbors in Second Avenue retail stores, is pleased to see people back on the sidewalk, but is now concerned that the new line could cause rents to rise. She pointed to the number of vacant storefronts in the area as evidence that rents are already too high. “There are so many empty stores,” she said. “It's definitely not good for small businesses, if you're not a bank or a CVS”

Maggie Clark, a community planning fellow with the Fund for the City of New York, found that retail occupancy rates on Second Avenue remained relatively stable from 2010 to 2017. She also discovered that there wasn't a significant difference in turnover rates between storefronts near the line's new stops, which bore the brunt of obstruction during the construction period, and stores farther away from the new stations.

Clark, an urban planning student at the Pratt Institute, will present a study examining business turnover along the corridor at a June 13 meeting of Community Board 8's small business committee.

Now that construction is over, Clark said, the main concern for local businesses is that real estate values will increase. But if commercial rents do rise, she explained, the impact likely won't be immediately visible, since many businesses are operating under long-term leases. Additionally, it will be difficult to isolate the new subway line's impact on rental rates from citywide retail trends. But Clark is hopeful that her study will provide a framework for analyzing the ongoing impact of rental rates on Second Avenue stores. “I hope that this can be useful in tracking which small businesses are most vulnerable to that kind of turnover and how they can be more directly helped,” she said.

Albert Khaimov, manager of L'MoshAliz Salon near 84th Street and Second Avenue, said local businesses are already feeling pressure from the real estate market. “Some people are already out of business, or when their lease is up they're not going to renew it,” he said. Khaimov, whose lease will be up for renewal in a year, said he's not sure if he'll be able to stay in his current location if his rent goes up. “I'm not complaining,” he said. “That's how it is.”

Robert S. Schwartz, owner of Eneslow Pedorthic Enterprises, said business at his retail shoe store on Second Avenue near 79th Street was down 30 percent during subway construction. “From the time they put the barricades in front of our store in 2010 until they took them down in December 2016, it was a struggle,” he said. Schwartz said he saw an immediate jump in business after the line was finished, but that sales have since flattened, which he attributed to larger economic factors.

While the new line was being built, Schwartz chaired the Manhattan Chamber of Commerce's Second Avenue Subway Committee, which worked with the MTA to launch a marketing campaign that promoted businesses impacted by construction. “We tried, he said. “I would say there was a very good effort to get some changes made by people who were not in a position of power.”

But despite those efforts, small businesses along Second Avenue still saw their sales negatively impacted by construction, and many owners feel that more should have been done to ease the burden. Schwartz was disappointed that the city didn't grant any benefits or redress to businesses along the corridor during construction, such as commercial rent tax abatements or sales tax breaks. “We got no relief of any kind whatsoever,” he said. “All we got was less business.”

Schwartz, who has operated stores in various New York City locations since 1973, believes Eneslow may be forced to close its Second Avenue and Park Avenue South retail stores because of rising rents, which he says have outpaced increases in business. “My anticipation is that I will have to downsize and close both locations in 4 years when my leases are up,” he said, noting that Eneslow has another retail location in Little Neck, Queens. “I know they're going to double or triple my rent.”

Klausner said she was concerned at the prospect of businesses being priced out of the neighborhood after years of subway-related disruptions. “It would be terrible for that to happen,” she said. “If you've lived through this and then you can't stay here to reap your reward.”