>>>MAYOR BILL DE BLASIO JUSTED THE POSSIBILITY OF INTRODUCING A VACANCY FEE OR TAX FOR STOERCHTS THAT ARE LEFT EMPTY A LONG PERIOD OF TIME OSTENSIBLY TO SEEK TOP DOLLAR RENT. THE PROPOSALS COMES AFTER A CITY COUNCIL REPORT FOUND IN MANHATTAN VACANCY RATES DOUBLED INTEREST 2% TO 4% OVER THE PAST FIVE YEARS. THE REPORT BLAMED LANDLORDS FOR CHARGING SKY ROCKETING RENTS AS BRICK BRICK AND MORTAR RETAILERS STRUGGLE WITH ONLINE COMPETITION. THE EDITORIAL DIRECTOR OF THE REAL DEAL, A REAL ESTATE PROCESS PUBLICATION HAS BEEN COVERING THIS STORY EXTENSIVELY. HE JOINS US NOW TO TALK ABOUT IT. AT A THAUNGTS FOR JOINING US.>>THANKS FOR HAVING ME.>>FIRST OF ALL, IS THE PROBLEM OF EMPTY STOREFRONTS UNPRECEDENTED IN NEW YORK CITY, BECAUSE YOU KNOW SOME BUILDING OWNERS SAY THIS IS PART OF THE REGULAR BUSINESS CYCLE, THAT HAS COME. AND THAT WILL SOON LEAVE?>>IT’S A LITTLE BIT OF BOTH. THERE IS CERTAINLY SOME — THE MARKET, THE RETAIL MARKET HAS GONE UP AND DOWN OVER THE YEARS. BUT SOME PEOPLE CALL IT EPIDEMIC. THERE IS A SYSTEMIC CHANGE IN THE RETAIL MARKET GIVEN THE RISE OF eCOMMERCE AND WE’RE GRAPPLING WITH THAT.>>I’VE BEEN IN NEW YORK CITY 40 YEARS. WE’RE TALKING ABOUT THAT. I’VE NEVER SEEN IT BETH OF US LIVE IN BROOKLYN. IT’S NOT JUST MANHATTAN.>>I WAS DRIVING IN AND TAKING A CAR. ON THE ATLANTIC AVENUE, STOREFRONT AFTER STOREFRONT, EMPTY, RENTS AVAILABLE, BROKERS. IT WAS JUST — IT WAS PRETTY SHOCKING TO SEE.>>SHOCKING AND KR DEPRESSING. BUT IS THIS AS SOME ELECTED OFFICIALS PORTRAY MOSTLY THE FAULT OF GREEDY LANDLORDS WHO REFUSE TO NEGOTIATE LOWER RENTS.>>I THINK THAT’S A LITTLE BIT OF OVERBLOWN TO BE HONEST. WHAT WE HAVE IS RETAILERS ARE GRAPPLING WITH A NEW ENVIRONMENT WHERE YOU HAVE THE LIKES OF AMAZON, JET.COM THE EGIANTS TAKING DAY TO DAY SHOPPING EXPERIENCE OFF THE THE STOREFRONTS AND ONLINE. RETAILERS HAVEN’T FIGURED THAT OUT. LANDLORDS ABSOLUTELY HAVE BEEN IN SITUATIONS WHERE THEY’VE HELD OUT FOR RENTS. BUT THAT’S A MINORITY OF THE ISSUE.>>IS IT REALLY A SMALL MINORITY? BECAUSE YOU THINK HOW IN THE WORLTD CAN THEY AFRAID — I’VE EVEN STOREFRONTS SHUT DOWN A MONTH AND A YEAR. HOW IS THIS ECONOMICALLY THE PROFITABLE FOR THEM.>>RAFAEL THERE IS A REAL COST TO A STORE EMPTY. YOU’RE PAYING DEBT ON THE PROPERTY, TAXES ON THE PROPERTY. YOU WANT TO HAVE THE INCOME STREAM. AND RETAILERS ARE AN IMPORTANT POINT OF THE INCOME STREAM. IF THEY LEFT IT FOR TWO MONTHS I CAN UNDERSTAND. BUT YOU HAVE SEEN THE STOREFRONTS BEEN VACATE ABOUT A YEAR. IT SEEMS TO BE A FUNCTION OF RETAILERS STRUGGLING FIGURING OUT HOW TO COMPETE WITH eCOMMERCE AND LANDLORDS SAY THERE IS TOO MUCH REGULATION, LICENSING FEES. RETAILERS ARE STRUGGLING TO PAY RENT AND RENT TAX. SO THEY’RE BURDENED WITH ALL OF THAT FROM THE CITY AND STATE.>>WELL THE MAYOR HAS PROPOSED AS WE KNOW — IT WAS NFLLY PROPOSED PROCESS. IN THE COURSE OF AN INTERVIEW. HE BROUGHT UP THE IDEA AS I SAID IN THE INTRODUCTION OF IMPOSING POSSIBLY IMPOSING A VACANCY FEE OR A VACANCY TAX FOR THE LANDLORDS WHO KEEP THE STOREFRONTS EMPTY FOR A WHILE. BY THE WAY TALKING ABOUT RESTAURANTS AS WELL.>>TALKING ABOUT RETAIL.>>SO FIRST OF ALL.>>FIRST OF ALL, IF THE MAYOR IS SERIOUS ABOUT THIS COULD HE AND THE CITY GOVERNMENT DO THIS? OR IS THIS SITCOM FOR ALBANY TOO.>>IT SEEMS LIKA I AM MAYOR HEAR ME ROAR. THIS HAS TO GO THREW ALBANY. IT HASN’T BEEN PROPOSED BEFORE. SINCE HE MADE THE COMMENTS. IT WAS AN INTERVIEW LAST WEEK. AND HE SAID CERTAIN THINGS BEFORE. IN NOVEMBER HE SAID — THIS IS A FAMSZ THING HE SAID IN NOVEMBER. IF I HAD MY DRUTHERS THE CITY WOULD DETERMINE HOW PRIVATE PROPERTY IS USED. AND THAT’S JUST NOT FEASIBLE. IT’S A FREE MARKET ECONOMY. YOU KNOW, LAST TIME I CHECKED. THIS IS THE KIND OF THING THAT LANDLORDS SAY IS THE FURTHER PUNITIVE MEASURE. IT DOESN’T SOLVE THE PROBLEM WHICH IS RETAILERS MOVED ONLINE.>>SO IF THE REAL ESTATE INDUSTRY AND THE ELECTED OFFICIALS OF THE CITY COUNCIL AND MAYOR GOT TOGETHER TO SIT DOWN TO DRAFT ONE OR TWO IMMEDIATE STEPS WE COULD TAKE TO AMELIORATE THIS PROBLEM, WHAT WOULD THE STEPS DO.>>THEY MIGHT INCENTIVIZE FILLING UP STORES. AND IF YOU GET IT RENTED THERE WILL ABCUT ON TAX. THAT COULD BE A SOLUTION. BUT THE THINGS HAVE TO GO THROUGH STATE LEVEL CHANNELS. IT’S A LITTLE BIT DIFFICULT. THEY HAVE NEVER — I DON’T THINK THERE IS GOING TO BE AN ININCENTIVE OR CARROT IN THAT WAY. WHAT THE LANDLORDS HAVE SAID IS FORGET ABOUT US. WORK ON FIXING THE PROBLEMS FOR THE RETAILERS BECAUSE RIGHT NOW THEIR COSTS ARE TOO HIGH. THEY ARE FACING YOU KNOW A DRAMATIC CHANGE IN THEIR BUSINESS.>>SO IN CONCLUSION, IF THE DYNAMIC STAYS AS IT IS — WE ONLY HAVE ABOUT 30 SECONDS? HOW WOULD IT AFFECT? WHAT WILL IT LOOK LIKE IN TEN YEARS IF NOTHING IS DONE.>>IN THE NEXT COUPLE YEARS YOU’LL SEE MORE EMPTY STOREFRONTS. IN OVER TEN YEARS AS YOU SAID THE MARKET WILL BEAR IT OUT. RENTS WILL FALL TO A LEVEL WHERE IT’S FINANCIALLY FEASIBLE AGAIN RENT. AND RETAIL — THE EXPERIENCE IN RETAIL WILL CHANGE. IT’S GOING TO BE A HYBRID BETWEEN IN STORE EXPERIENCE AND SOMETHING SHOPPING ONLINE. YOU MIGHT GO INTO A STORE AND YOU MIGHT TRY SOMETHING ON. BUT THEN THE COLOR OR THE SIZE THAT YOU WANT WILL BE ONLINE SHIPPED TO YOUR DOORSTEP.>>WELL WE’LL SEE IF IT HA HAPPENED. THANK YOU SO MUCH FOR JOINING US TO TALK ABOUT IT.>>APPRECIATE IT.
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THANK YOU.