The 2013 New York City Mayoral Election is scheduled to take place on November 5, 2013. Until then and maybe a short period of time thereafter, there will continue to be uncertainty in the NYC investment sales market. Due to the capital gains tax increase to 23.8% from 15%, the NYC investment sales transaction volume has declined significantly. With a new Mayor come this fall, regardless of which party they represent, real estate taxes are expected to increase to somewhat offset New York City’s’ growing budget deficit further increasing the burden on real property owners. This in turn will lead to more mom and pop shops closing because the products offered to consumers will be more expensive in order for the landlord to pay the real estate taxes and consumers will rarely overpay for a product they can buy for much less at a chain store.
Take Big Nicks for example. Here’s a small town restaurant that had been a go to spot for Upper West Side residents since 1962. Big Nick’s was asked to pay $60,000 per month to continue to lease its tiny but efficient 1,000 square foot space on 77th and Broadway, an increase of $18,000 per month. The increase in asking rent was due to the increase New York City placed on the buildings taxes. Here’s the story by “West Side Rag” http://www.westsiderag.com/2013/07/28/rip-big-nicks-burger-pizza-joint-1962-2013
Look forward to this trend of unique stores closing down due to New York City’s tax policy on commercial buildings. The city will look for and implement other ways to tax more people to generate additional revenue for New York City. Other ways might include A) congestion pricing, which might be one of the reasons for the city’s bike rental program and extention of bike lanes and B) tolls on the Queensborough, Williamsburg, Brooklyn, and Manhattan Bridges.