9 of Every 10 Restaurants and Bars in NYC Can't Pay Full Rent | Hacker News Reader

9 of Every 10 Restaurants and Bars in NYC Can't Pay Full Rent

nytimes.com

40 pointsAndrewBissell28 comments

Louis Rossmann discussed this in a video recently: https://youtu.be/vt_3OLs_lXE

Also, I would add that customers and stores are like a symbiotic population ecosystem. You kill one, you kill the other.

And then as people shift to nearly permanent WfH and the buildings go vacant, the restaurants become redundant too.

Also, pandemic or not, commercial landlords charging $200-300+ sq ft compared to $50 are repeatedly murdering whatever foolish business moves in.

It'S nOoOoOt LyYyInG, iT's CoMmMmMmErCiAl ReEeAl EsTaAaTeEeEe.

There's not an easy solution to this. Landlords are typically highly leveraged. If you buy a $4 million property with 5% down, you only had to put down $200,000. But you told the bank that you would get $x/square foot.

If you lower the rent, that implies the value of the property is less than $4 million dollars. And that probably breaks a covenant with the bank. https://www.brickunderground.com/rent/do-concessions-throw-o... Landlords are more likely to give free months or other things so their advertised rent stays high.

Having a home where you owe more than it's worth is "being underwater". If you bought it for $4 million but it's now worth $3.5 million, the bank is going to want you to come up with the missing $300,000 (in addition to your initial $200,000). They might even want more since if it dropped that far, it might keep going and be worth even less next year.

Bank forecloses, sells for new value, rent lowers.

It will suck for current owners, banks, and current tenants. Could take years for everything to settle.

I would not want to work in commercial real estate right now.

If you buy a 4 million dollar property with 5% down and you go bankrupt it’s your own fault for being over-leveraged If you can’t do the downturn, don’t do the leverage.

Just keep on with the lockdowns and everything will be fine. Safety first!

Rent plus city tax, payroll tax, super high minimum wage, 200 different departments of red tape, and on and on. Covid is the straw that broke the camel’s back but there was only so much NYC business could take. Plus the absurd posturing related to Amazon’s HQ2 and subsequent pullout.

NYC cannot possibly believe that they are seen as “pro-business”, so they can’t expect business to bail them out of their financial difficulties because being in business is too onerous. They may get a final wealth seizure from the super-rich with some sudden tax increases, but they will decamp to Florida or other low-tax domiciles after the first theft.

If the federal government doesn’t bail out New York, I’m not sure how they are going to survive without bankruptcy and massive structural reform of their pension obligations, bond holders, and bloated bureaucracy.

The HQ2 farce hurt bars and restaurants? Are you sure you aren’t just listing all the axes you like to grind?

Blaming greedy landlords for the plight of restaurants ignores the larger problems that are bringing the entire city to its knees. Why is the subway bankrupt and with terrible service? The seeds of this were planted well before COVID. Once the restaurants close, the tourists don’t come, Broadway has no shows, and the entire system implodes, I don’t know how NYC will pick up the pieces except a vast restructuring towards pro-growth, low tax, low regulation, and strong emphasis on rebuilding without the shackles of the current government.

Restructuring to low tax, low regulation won’t fix anything. That’s been our position at the federal level for years and it doesn’t seem to do much but lead to worse outcomes with less accountability. It does further enrich the wealthy and entrench special interests with no incentive to provide good services, though. So there’s that, I guess.

NYC and Chicago are corrupt, bankrupt, overburdened disasters and they are seeing the fruits of their labors. It doesn't have to be this way. You can believe the wealthy caused all of these problems despite decades of Democrat rule, but it is truly the bureaucracy and government that brought them there.

NYC is a corrupt disaster? It's one of the largest economic centers in the world. It's fine. Maybe you just don't like large cities.

The MTA is struggling but it has nothing to do with "Democrat rule" and everything to do with the fact that everyone wants to build but no one wants to maintain. No one gets reelected for a maintenance project that'll improve quality of life 5-10 years from now. They get reelected for adding two new lines to an already struggling system. That's why the United States has bad infrastructure top to bottom.

If the United States were a company, we'd be run by product managers perpetually trying to get promoted next performance review by releasing a new, half-assed product every single quarter.

Lowing taxes when they are too high makes sense. Raising taxes when they are too low makes equally as much sense. Why everyone accepts one and not the other is the core issue.

Yeah it's pretty difficult to see how you can have it both ways. Either you want HQ2 along with all the tax concessions- in which case taxes on other businesses like bars and restaurants will have to rise to recoup that lost revenue. Or you support the requirement for HQ2 to pay their taxes so that you don't have to levy unsustainable taxes on other businesses.

Something's gotta give. If your business can't survive paying livable wages or the rent is too high, move or do something else.

Also, the amount of residential and commercial back-rent, and pending evictions stacking-up is another socioeconomic disaster waiting for the other shoe to drop. And when tens of millions lose their housing, it could be Brazilian favelas-bad.

Not all government is "bad." It's impossible to live in a society without enforcement of rules because anarchy is a wishful utopia that doesn't scale (Tragedy of the Commons). Nuance in what policies and government processes are part useful and/or part hinderances is needed.

There is a workable solution between anarchy and NYC. I would argue NYC is an unworkable situation that was only middling along when everything was perfect, but now that pandemic world is here, it is totally unworkable. What's gotta give is municipal bond holders, pension recipients, and the bloated and inefficient bureaucracy.

Anarchism is the solution. Wage slavery is the problem. The whole system is collapsing because of the greed of businesses and banks.

Anarchism only works if people's basic needs are met without question. I don't see that happening anytime soon in usa.

At least that's what I get from books like social anarchism

Two things.

Wage slavery and lack of ownership of the means of production are huge problems, among many other problems.

However, there is no single, prescriptive utopian panacea; this would be an unserious, rhetorical ejaculation. If it "worked," anarcho-syndicalism would be everywhere. What works sustainability in the real-world is between socialism and strongly-regulated capitalism, but with highly-engaged participants and co-operative owners who get dividends and a stake.

Banks need to exist, but not as they are predominantly in concentrated wealth, power, chicanery, Wall St. speculation, and economic warfare. Credit unions, nonprofit networks and investment funds.

In order to make any lasting changes, first the power expressed by the 100k or so of the $100M+ to billionaires must be removed as the aristocratic cabal who buy power outright through lobbyists, politicians, tax dodges, PACs, and legislation favorable to themselves. Any real change must first eliminate the influence of their reckless, antisocial, vampiric greed.

These places are paying $25,000 a month in rent. The additional minimum wage is so small compared to that figure.

Rent and labor are the highest costs for retail businesses. $15 minimum wage is not small, unless you believe a restaurant only needs to be staffed by two people. And good people in any industry, restaurants included, do not make minimum wage, but well above it. Minimally skilled workers make the minimum wage, and workers who are valued less than $15 per hour have no job at all.

Every "minimum wage" job I've ever worked (I'm in Australia) has paid at or above $15USD/hr. We have plenty of jobs and plenty of restaurants. Why is the US different?

I don't know the details of Australian working life, so I can't speak to the specific differences. But a lot of things push down the lowest labor rates in the US:

* A long history of slavery followed by systemic disenfranchisement, creating an underclass of poorly-educated people with few job skills and difficulty obtaining any employment.

* A slightly-shorter-but-still-long history of using labor from people not legally allowed to be in the country, to whom protections (including the minimum wage) apply only sporadically or not at all.

* Collapse of labor unions (happening now in Australia, I gather, but ongoing for four or five decades in the US)

* Active, well-funded hostility to minimum wage laws, driven in part by a strong temporarily-embarrassed-millionaire ethos[1] in which people believe they will one day be rich and don't want their wealth siphoned off by the undeserving poor (even if they are, currently, poor themselves).

* Even more racism, in which the minimum wage is seen as a giveaways to brown-skinned people who would not otherwise be able to earn it.

[1] https://www.goodreads.com/quotes/328134-socialism-never-took...

god forbid you pay the fucking employee half the money it takes to rent an apartment in the city.

oh the greed

In those cases where supply is less than demand someone has to pay more.

If there are no 7.50 an hour or 1 dollar an hour employees they need to pay at least $15.

If someone is valued at less than 15 the owner still has to pay more. Same as in sports there is only one Michael Jordan you may value his services at 7.50 an hour but others will pay millions. Either you overpay or your position goes unfilled.

In my experience, most of the opponents of minimum wage laws are not opposed to market wage realities.

If the market values your labor at $25/hr, neither you or I care whether the minimum wage is $7.50/hr or $15/hr (with respect to you).

If you can create $10/hr of value for a business, I think there's a reasonable argument that it's better for you to be able to have a job at $8 or $9/hr than to declare that arrangement illegal and force you to either be unemployed or find an employer who is willing to for whatever reason to pay you $5/hr more than than the value you contribute to the business.

As a society it is not better. If they refuse to staff at $10.00 they do not hire or gain additional marketshare. Another company will take that business at that level. Or no company will step up and that will raise prices.

Minimum wage simply creates a market floor.

IMO, minimum wage both creates a market floor and by doing so shuts some people out of the labor market at the margin.

It shuts someone from a 10 dollar job that doesn't exist. But it doesn't shut people out of the labor market.

Removing the floor creates a new cheap labor market where Americans are shut out because they can't afford to live in that wage group. That's why the cost of living should be connected to min wage.

Take vegetable picking as an example. No one will pay an American min wage so they can't fill those jobs. They want 3 dollars an hour workers. No American can afford to live on that so they are shut out of those jobs. They import temp workers who can convert $3 American to $20.00 their currency and can live a higher standard of living to their peers.

Removing the floor killed thousand of American jobs. Why would we import it to other industries?

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