A yak-skin championship belt hangs in Yamuna Shrestha’s restaurant in Jackson Heights, Queens, where her momos — pillowy meatballs from Nepal — has been voted four times the best in the district.
But the business, Bhanchha Ghar, which opened in a modest storefront under the 7 train shortly before the pandemic began, owes more than $150,000 in back rent. Covid restrictions closed the shop for several months in 2020 and business was slow to recover. While Ms Shrestha is paying off the debt, she is paying her landlord more than $13,300 a month in rent – an 11 per cent increase since 2019.
“Rent goes up every year and it feels unfair,” Ms. Shrestha said in Nepali during a recent 18-hour work day. “If I could save, I would have already paid it back.”
Three years after the pandemic flattened the Manhattan office market and the commercial ecosystem that depended on it, small businesses in other boroughs are facing the biggest rent increases in the city as Manhattan rents fall. The burden falls mostly on store owners in predominantly black, Latino and Asian neighborhoods, according to a new analysis of Treasury Department data.
Now the owners of many of these small businesses, many of which didn’t qualify for pandemic-era government loans and grants, worry that steep rent increases and a lack of protections for commercial tenants could close their stores just as the economy picks up. Those businesses helped fuel the city’s recovery while the rest of the economy faltered, and many store owners say they fear they will be left out of the resurgence.
At risk, they say, is the soul of the city: the minority- and immigrant-owned businesses that create a path to the middle class and provide hard-to-find goods and services in ethnic enclaves.
“For the first time in the history of New York City, their existence is threatened,” said Annetta Seecharran, the executive director of Chhaya, a nonprofit community development group. “Their No. 1 problem is the rent.”
From 2019 to 2021, the most recent year for which data was available, the average storefront rent per square feet by 23 percent in Brooklyn, 14 percent in the Bronx and 9 percent in Queens; rents were flat on Staten Island and down 11 percent in Manhattan, according to an analysis of Department of Finance data by the Association for Neighborhood and Housing Development, a nonprofit housing coalition.
In districts where rents rose, people of color made up 72 percent of the population, the analysis found, raising concerns about displacement and gentrification.
“As these businesses are drowned out by this wave of rising rents, the culture is disappearing,” said Paula Segal, an attorney with TakeRoot Justice, a nonprofit legal services group.
The neighborhoods with the biggest rent increases included the Rockaways in Queens, where monthly rents rose nearly 38 percent, and several neighborhoods in the Bronx, including Concourse and High Bridge, where they rose 33 percent, the analysis showed.
Before the pandemic, annual rent increases of 3 percent were typical, real estate agents said.
Rents fell the most in Lower Manhattan, where they dropped nearly 17 percent, according to the report, which analyzed rents based on council districts.
“Early in the pandemic, people were talking about these huge discounts renters were getting,” said Lucy Block, a senior research and data associate with the group. “In Manhattan that may be the case, but it certainly doesn’t happen in the outer boroughs.”
And the rent continues to rise. IN an investigation by the Association for Neighborhood and Housing Development of more than 100 small businesses in Queens, the Bronx and Manhattan’s Lower East Side, rising rents were the top concern, with nearly two-thirds of business owners saying their rents increased by at least 10 percent last year, according to Gina Lee, a program coordinator with the group.
A spokeswoman for the mayor’s office said in a statement that the city is “doing everything we can to make sure small business owners are able to keep the storefronts they’ve worked so hard to build,” including Commercial Lease Utility, which provides free legal services to small businesses. The program has helped nearly 2,000 businesses with their leases, she said.
The rise in rents coincided with an increase in new business creation, particularly outside Manhattan, where commercial corridors revived faster than districts that relied on office workers, according to an analysis of U.S. Chamber of Commerce data by the Center for an Urban Future , a public policy think tank.
Applications for new businesses increased by 30 percent between 2019 and 2021, said Jonathan Bowles, the group’s chief executive. The biggest increase was in the Bronx, which saw a 66 percent jump.
The trend continued last year, according to the city’s economic development corporation. There were 279,488 businesses in the third quarter of 2022, up 4 percent from the same period in 2021, with the fastest growth seen outside of Manhattan. Collectively, small businesses provide 26 percent of New York City’s jobs, the EDC says.
“The pandemic really sparked this wave of entrepreneurship,” said Mr. Bowles, in part because so many workers in industries like retail and hospitality lost their jobs and saw an opportunity to be their own boss. “But it is far from certain that most of these new companies will be able to survive and grow.”
Anwar Althary, 46, a Yemeni businessman who owns cafes and juice bars in the city, said there was a brief period early in the pandemic when landlords offered discounts. He took advantage of opening his newest store, Hemo Cafe, in Bay Ridge, Brooklyn, in 2020, renting a space that could have made about $1,000 more a month.
But last year a new landlord bought the building next door, which is home to another business run by Mr Altary. He is worried that the owner will raise the rent and make him pay a portion of the property taxes.
Mr. Althary already owes significant back rent across his businesses, he said, because of pandemic disruptions, and he was forced to permanently close two of them last year. He said he applied for a loan through the Small Business Administration to help pay off the debt, but he didn’t qualify because he lacked paperwork.
“I have a mountain on my chest,” Mr. Altary said in Arabic.
He was not alone in being rejected. The federal agency received just over 1 million loan applications for its pandemic relief program in New York state; only 339,000, or less than a third, were approved, according to an agency spokeswoman.
Somia Elrowmeim, a board member of the Alliance of Yemeni American Businesses, said many immigrant-owned businesses did not qualify for government grants and loans because they did not keep adequate payroll records and in some cases employed undocumented workers.
Unlike some residential tenants, store owners who rent their spaces have no right to renew their leases and are not protected from large rent increases when they expire, said Rolando Gonzalez, a lawyer with the Legal Aid Society.
Many shopkeepers, especially in immigrant communities, operate on month-to-month leases, Mr. Gonzalez.
Christian Ramos, 43, the owner of Blue Chus Shoe Repair in the Kingsbridge section of the Bronx, said he and most of his neighbors had month-to-month leases.
He’s been in the same place for 19 years and said he’s current with his $3,500-a-month rent. But he recently had to pay back $12,000 in arrears that accumulated as sales slowed due to the pandemic. He didn’t qualify for a government grant, he said, because his business didn’t have enough revenue.
Instead, he paid back the debt by setting up tables outside his shop, selling shampoo and other household products. “I basically had to start another business,” he said.
He worries that new development could encourage landlords to seek out higher-paying tenants at the expense of longtime merchants.
“We’re fine right now,” he said, “but I don’t know what will happen later.”
Some store owners feel that as the city recovers, they are being overlooked, said Nancy Martinez, the president of REMA 4 US, a merchant group in Far Rockaway, Queens.
“It’s like they’re trying to move everybody out,” she said, referring to a flurry of new housing in the area that forced street closures and hurt local businesses.
The resulting loss of foot traffic, combined with Covid restrictions, prompted Jeanett Hutchinson to close her longtime Far Rockaway flower shop at the beginning of the year to settle about $19,000 in rent arrears.
Mrs Hutchinson, 64, said she still wanted to work but her industrial fridge was lost when she left the shop, making storing flowers difficult.
She said she hoped to set up a sidewalk table to sell what she can, but she can’t afford the monthly rent on nearby storefronts, which start at $1,000 more than she was paying.
“You just can’t survive,” she said.
For Ms. Shrestha, the Nepali restaurant owner, paying off her six-figure debt is a means to another end: reuniting with her two children, whom she has not seen since she left Nepal in 2008.
Ms. Shrestha is legally authorized to work in the United States, but her immigration status is “withholding of removal,” a kind of limbo that would prevent her from re-entering the country if she were to leave. She said she was turned down for an $83,000 loan from the Small Business Administration because of her immigration status.
Once she is able to pay off the store debt, she can refocus her attention on bringing her children to New York, she said. “I want to be with my family – that’s my biggest concern.”
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