Supermarkets Are Endangered Species in NYC Part 1
January 31, 2018

Supermarkets Are Endangered Species in NYC Part 1 by Denisse GironBy Denisse Giron, Gotham Government Relations

{3:00 minutes to read} There is a serious affordability problem for retail business in Manhattan. Rents are adding to the affordability crisis because the landlord pays property taxes, which are passed down to the tenants through their rent. In addition, boutiques, stores in SOHO, and even billboards are all subject to the commercial rent tax (CRT), which retail businesses pay to the city, essentially giving them a double tax.

The commercial rent tax is a tax that has been around for decades. It specifically applies to renters or tenants in Manhattan that are below 96th Street and whose annual rent is above $250,000. However, the CRT has had a lot of unintended consequences as it specifically relates to supermarkets.

Supermarkets are Struggling

Supermarkets supply New Yorkers with fresh meat, produce, baked goods, gourmet foods and more. New Yorkers rely on them for the daily food they need to feed themselves and their families. But supermarkets are struggling, and New Yorkers have been seeing many stores closing due to the high cost of doing business.

Supermarkets occupy really large floor space areas in some of the largest buildings. In addition to the cost of the rent for these spaces, they employ a large number of workers to provide service to their customers.

Further compounding the problem is increased competition, whether it comes from online grocery delivery services, like Fresh Direct, Amazon Fresh, or even things like Blue Apron. There is also the increased competition that comes from all the drugstores popping up on every corner selling half of the supermarkets’ dry goods inventory, like cereals.

And let us not forget the street vendor issue, which was a hot topic recently in City Council. There are fruit peddlers that stand right outside supermarkets selling fresh fruits and vegetables. These vendors can take $5,000 to $7,000 profit a week.

There is a crisis out there with a lack of fresh food and the effect that it’s having on the health of New Yorkers. There are studies that directly link fresh food and access to fresh food to a decrease in obesity and obesity-related health issues.

The bottom line is that supermarkets are struggling and getting rid of the CRT would be a huge relief for them, allowing them to provide more and better food.