Liquor Store On Superblock Forced To Close, NYU Insists Unrelated To 2031

Though LaGuardia Place’s Washington Square Wines and Liquors will close in a few days, NYU maintains that the disappearance of the store is unrelated to the 2031 Plan. The store’s manager blames its departure on NYU’s demolition clause and promise to double the rent, but NYU insists that it is, by New York standards, a forgiving landlord.

The demolition clause that manager Clift Arden recalled is perhaps the most intimidating part of the proposed lease. It allows NYU, if it so desires, to close any business within six months.

“They’ve kept it so that we can’t sell the store by not allowing any compromise for the new people. If the block isn’t going to be touched for ten years or more, why put it in the lease now?”

Philip Lentz, Director of Public Affairs at NYU, has an answer. “The demolition clause is very common in all NYU rent retail leases, as well as most rent retail leases in New York City.”

The store was hoping to sell its inventory and license to a new buyer, and is frustrated that three prospects suddenly fled. Arden believes that this is because they got a handle on the new lease, and realized what was in store for them.

Though NYU does not deny that it would double the rent in the next lease, Lentz pointed out that this is only because the University has maintained the rent for the store over the last six years. It has not applied “the regular escalation clause.” Knowing that the store would not be able to pay an escalating rent – as it wasn’t paying the rent it already had – NYU began to lease on a month-to-month basis. If NYU had insisted on escalating the rent, it would be about double of what it was in 2007, when the lease was last negotiated.

Though the store does owe backrent – about $111,000 of it – Arden explained that this is because it is subject, like most liquor stores, to weather. When outdoor cafes and beer sales pick up during the summer, liquor stores lose (and under New York State Law, are prohibited from selling beer). Wintertime is when they break even and begin to make a profit. Snow days—the delight of adults who rarely get time to drink during the week—boost sales. NYU’s February crackdown on the future lease does not account for the probability that the store will be able to pay up by winter’s end.

The store, now 40 years old, is feeling its age: Its warning to under-21s, “in effect since 1985,” also looks like it was printed then. The stock is empty (though this is probably because it is in its last days), and the employees move around slowly, as if what they do now has little influence.

Arden, though he does not profess to be entirely knowledgeable about the ins and outs of NYU’s policy, speaks as a local manager who, though he might not be technically suffering from the NYU 2031 plan, lives in fear of it. A commenter on The Villager article noted that, because NYU receives city land, it gains next to nothing, it is rare that the University suffers. And, when the 2031 Plan kicks in, it will receive more than it could possibly lose from charging the lower rent that would keep these stores in business.

Whereas the store faces a lose-lose situation, the University does not: Arden claims that it can write off the last rent collected, until it is back on the market and leased again. He defined the powers-that-be as reaching far beyond NYU and to the city itself, which, through commercial real estate law, “favors the landlords,” which in this case happens to be NYU.

“Any figure they want to ask, there’s nobody to stop it, nobody to talk to,” he said.

[Image via]



6 Comments

  • Brandon Booth
    March 4, 2013

    Was it ‘forced to close’ or did the store owe $111,000 in back rent and hadn’t seen a rent increase in over 6 years. Have you ever rented anything in NYC? Most if not all landlords don’t let you ever fall behind on rent so the fact that being over a hundred thousand dollars late on rent is somehow a regular thing for this business is actually proof contrary to the point you’re trying to make.

    I’m sorry but if you are going to write an article about NYU being a big bad landlord find something to write about where that is what is actually happening. Instead you have written an article about a landlord that has allowed a tenant to run late on rent and has voluntarily allowed them to rent month to month with no rate increases for 6 years. That sounds awful. Run for the Hills. Leave the village before it becomes inhospitable.

  • Liz Preza
    March 4, 2013

    less school more booze

  • Daniel HC
    March 4, 2013

    @Brandon–I think the point of the article is that after six years of lenient treatment of the store, NYU decides to double the rent and insert the six-month demolition clause now, presumably in anticipation of 2031 construction. The school recently forced out Ennio & Michael’s, a restaurant on the block, by doubling the rent (or so I heard)–the space still hasn’t been filled. And in 2004 it did the same to The Bottom Line, one of the most storied clubs in the Village, and turned the space into classrooms. So I would say NYU isn’t the most benevolent landlord. For one thing, it’s pretty clear that whatever rent the school collects from any of these places is pocket change for it, given that it was willing not to raise the liquor store’s rent, to put up with its debt, and to put up with vacancies, whereas many landlords can’t afford to allow tenants to fall behind or space to go unfilled because they actually rely on the income. For another, to the extent that it is benevolent, it is so until it decides it wants the space for something else, which isn’t really benevolence at all.
    It’s a benevolent and altruistic landlord until it has an interest in not being one–meaning it’s neither.

  • Brandon Booth
    March 4, 2013

    @Daniel – Ok so we have both established that NYU treats its tenants better than other landlords so why is it the bad guy in this scenario, or any of the others you mentioned? It sounds like you are making some argument about a not for profit university having so much money they should not care about managing their rental properties in a responsible way. Even though they are a not-for-profit it still buys land just like any other land owner, it has the same overhead on that land and it even pays many of the same taxes as any other landlord, minus those that are adjusted for its non-profit status. Why should it be seen as the bad guy for using the land it owns in the way it wishes. NYU is not exercising imminent domain and forcing these businesses to move they are just making decisions about what use to put land they own to. It is not the tenants right to renew a lease it is the landowner who has invested in the properties right. What you call ‘forced out’ is actually not renewing a lease which is a VERY normal thing. NYU despite its endowment has less money to spend per a student than almost any other university in its tier, these decisions to not increase rent, to wait as long as possible before not renewing a lease, they are made at a cost to NYU just like any other land owner. Before you defend a business or attack a landowner get this idea that NYU is some bottomless money pit out of your head and start thinking about things in realistic terms.

  • Daniel HC
    March 4, 2013

    I said nothing about how it should use its properties. All I said, in response to your claim that it treats its tenants well, was that treating them well is entirely conditional on NYU’s interests–meaning that it’s as hard-nosed a landlord as any other. In the case of the liquor store, the school let it stay even though it was behind on rent (because it doesn’t derive significant income from the property) until it had an interest in kicking the store out (ie, in anticipation of NYU2031). Clearly the administration doesn’t care if the space remains vacant, otherwise it wouldn’t have inserted the demolition clause into the lease, and the school would have found someone to replace the restaurant. This would seem to imply that NYU is prepared to absorb the relatively insignificant cost of not renting the properties (nowhere did I say that it was a “bottomless money pit” though) if it makes bulldozing that building easier. NYU isn’t forcing out tenants because they’re behind on rent–the decision appears to have to do with expansion, not cost.

    As to the question of why forcing tenants out might make NYU the big bad landlord–if it owns the property it can legally do whatever it wants, but that says nothing about whether it’s right for it to do so. The school has torn down two churches, closed down one of the Village’s best-known clubs, evicted a liquor store and a restaurant that had been there for forty years, and probably more. Many people argue that in doing so it’s ruining the area. Whatever your opinion on that, it’s pretty clear that, from the perspective of those who have been forced out because NYU raised the rent, it’s certainly the big bad landlord, whether what NYU does is normal or not.

  • Lynn Dizard
    March 5, 2013

    Good reporting — well balanced presentatioon of the facts of the case without an excess of editorializing opinion.

Leave a Reply

Commenting for the first time? Your comment may not appear immediately, so please be patient. See our policy on comments.