Commercial rent control pondered as retail vacancy rate in Manhattan continues

Commercial rent control pondered as retail vacancy rate in Manhattan continues

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Imagine if well-meaning animal lovers became upset at the cycle of life and death on the African plains and persuaded governments there to put an end to it. Various human interventions would protect the gazelles, wildebeests and other prey from the lions, crocodiles and other predators. The formerly vulnerable species could graze and drink in peace without fear of being ripped apart. Tourists could take selfies with the newly tame creatures, and everything would be wonderful. Right?

It’s not hard to see why this would go horribly awry. The lions would have to be fed, lest they starve—an expensive and logistical nightmare for the governments—and would lose their ability to hunt, prompting comical attempts to retrain them. Free of worry, the former prey animals would breed like mad, eating every blade of grass down to the dirt and degrading their gene pool, as the weaker ones would no longer be culled. Massive erosion-control and birth-control programs would be launched to restore the landscape and limit overpopulation. With nature upended, tourists would lose interest, and economies would dry up.

When a naturally functioning ecosystem is disrupted, the unintended consequences are severe and trigger responses that tend to ameliorate one problem and cause two more. Which brings us to the City Council’s advancing of a bill to establish rent control for commercial properties.

New York City looks nothing like the Serengeti, but its economy works the same way, with successful businesses growing and unsustainable ones closing. The failures make way for innovative ideas that keep New York’s shopping and dining experiences dynamic for 8.6 million locals and 63 million annual visitors. The council’s notion that it could improve things by guaranteeing commercial tenants the right to unlimited 10-year lease renewals through arbitration would be laughable if it weren’t scary. All eight contenders for council speaker last year endorsed the concept, and the winner, Corey Johnson, has just agreed to give a commercial-rent-control bill a hearing. Mayor Bill de Blasio, to his credit, is not on board, but it is troubling that the so-called Small Business Jobs Survival Act is even taken seriously by the council.

The retail vacancy rate is high in Manhattan; online sellers have gained market share, and some landlords are holding out for the robust rents they formerly reaped. But to overreact by trashing a fundamental premise of our market economy would be a disaster, victimizing not just landlords but entrepreneurs needing space and workers seeking the higher pay that successful merchants can afford. If rents must come down for storefronts to be filled with new restaurants and shops, they eventually will. Evolution can’t be rushed.

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