What’s The Deal With Small Business in Brooklyn Heights Lately?

It’s been a tumultuous few months for businesses in Brooklyn Heights. Brooklyn Heights Cinema, Crumbs, Taperia, Connecticut Muffin, and Siggy’s have all closed or announced closures recently. Meanwhile, a handful of new businesses have begun to inhabit the area: there’s the new Clean Bedroom showroom, Gramercy Park restaurant Friend of a Farmer is busy setting up its second location in the long-vacant antique anchor space down the street, and reliable sources tell us a new commercial tenant has been found for the similarly dormant space vacated by Montague Jewelers near Court Street.

The rapid turnover hasn’t really surprised longtime local business owners, many of who noticed years ago that their ranks were thinning and being replaced with chain retail and higher-end stores. “There’s not many small stores left,” said Sam El Romi, owner of Pet Emporium on Montague Street. “You see a lot of bigger stores. Is it for the better?”

Some BHB readers seem to agree with El Romi’s sentiments, pointing fingers at nearby chain eatery Le Pain Quotidien as one of the reasons behind Connecticut Muffin’s demise in particular.


To be fair, as far as we know, the businesses that have closed recently have done so for a variety of reasons unique to their particular situations. Some of them also weren’t exactly local in the strict sense of the word: Crumbs and Connecticut Muffin were both chain stores. Siggy’s, while hardly a chain, does have another location in Manhattan.

But Siggy’s, Connecticut Muffin, and Heights Cinema were neighborhood fixtures for many years. And their recent closures in quick succession can’t help but bring to mind the spate of recession-era shutterings in Brooklyn Heights that occurred years ago, when retail vacancies topped out at 6 percent in 2008.

Things don’t appear to be quite as dire today. Anecdotal evidence suggests some local shops are doing well: this BHB reporter enjoyed a delicious dinner at a packed Sociale on a recent early Saturday evening; the local wine shops on Clark and Montague seem to do steady business; and the yoga classes at Area Yoga and Yoga People seem consistently well-attended.


But there is a sense among longtime local proprietors that owning your own building is the only guaranteed way to stay in business, and that the retail churn observed lately will continue, thanks mainly to commercial landlords looking to cash-in on Brooklyn’s continuing development boom.

“There’s definitely more chains nowadays because they can pay the rent,” said Thomas Calfa, owner of Lassen and Hennings, who also owns his the building where his 76-year-old store is located.

It seems reasonable that commercial rent increases could be a major cause of the recent closures and long-vacant storefronts in Brooklyn Heights. But data indicates that overall rents in the neighborhood have been largely stable for a few years now. On Montague Street, they averaged between $100 to $149 dollars per square foot as of May 2014, according to the latest survey CPEX Real Estate Services, about the same as three years ago.

However, that’s much higher than the average commercial rental rate for the entire borough, $37.15 per square foot as of the fourth quarter of 2014, according Newark Grubb Knight Frank, another commercial real estate advisory firm.

“People talk about evil landlords, but it’s not that simple,” said Robert Hebron IV, associate broker at Ingram and Hebron, a realtor that rents commercial space in Brooklyn Heights, including the former Montague Jewelers spot. He added that critics should try and put themselves in the commercial landlords’ shoes. “If you or I own a business, of course we’re going to want to maximize our asset.”


Another factor to consider is property taxes. As the city’s Department of Small Businesses helpfully notes: “Most commercial tenants are required to pay a share of the property tax due on the building.” While tax rates have remained fairly stable in recent years, the effective tax rate for commercial property owners has generally been much higher than that for homeowners. That’s because New York City divides property into four classes and assesses them at different rates, with homeowners paying taxes on a maximum of 6 percent of the market value of their property, and all other property owners paying taxes on as high as 45 percent of their property value.

There could be additional pressures as well. Calfa, for one, believes as more of the borough has developed and gentrified, fewer residents from across Brooklyn are coming to Brooklyn Heights for their dining, shopping needs, or recreational needs.

Still, some small business owners believe there will always be a place for them in the Heights. “There will always be a mix of businesses here,” said Juan Rivera, owner of the Variety Mart hardware store on Montague Street and the building above. “But it’s true you don’t see a lot of new small businesses wanting to open. In the last 10 to 15 years, the mixture has gone toward chains and away from mom and pop.”


As for the new businesses moving in, life isn’t exactly easy for them either. Take the new Clean Bedroom store at 145 Montague St, which opened last fall before Thanksgiving, offering sustainably-made mattresses and bedroom furnishings at premium prices. The latest in a small, family-owned chain with other six stores across New England, the new Clean Bedroom was empty when BHB visited earlier this week.

“Business started off pretty slow,” said Stephen Bickos, a sales associate at Clean Bedroom. “It’s starting to pick up now. We’re seeing an influx of customers.” Bickos said he believed that people may have been busy doing holiday shopping for gadgets and other mass market gifts around the time of his employer’s opening. “I think we’re a good fit for the neighborhood,” he added.

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  • no-permits

    i think you are referring to a loss cary forward. it is not specific to real estate and simply allows you to carry a loss over to the following years. basically, if you lost $35k in a tax year, and not because you left a space empty, but because you had expenses that amounted to that, you could not write all of that off. you could take $25k this year and carry the rest forward.

  • no-permits

    my point is, that a lot of people write “tax breaks” for landlords, but they don’t exist. please tell me about them because i would love to know. as a landlord, if tax breaks exist, i’ve been doing it wrong all these years.

  • Heights Correspondent 1

    No, one of the Most important factors in the decline
    Of mom and pops is…ugo eurobucks…the huge
    influx of foreign investment..and ownership…
    in the NYC real estate field. The US allowing
    uncontrolled foreign investments..(something
    US investors can never do on a reciprocal basis)
    Is the big factor in the explosion of rents. True,
    The entire atmosphere of financialization and
    the fact that a lot of these buildings have been
    Flipped many times during the 60’s, thru the
    90’s and now the financed amount on the bldg,
    The “nut” is HUGE. but foreign money is a BIG
    BIG factor….

    Uh, besides the other big factor, the real estate
    Field being awash in DRUG money..which started
    The supercharged property values and rents..
    Just ask any ex dea guys..there’s enough in
    The Heights….

  • http://iceberg18.blogspot.com iceberg

    Ask Kramer, he might know something about write-offs ;P

  • http://iceberg18.blogspot.com iceberg

    In other places I’ve visited, urban retail businesses are not restricted by zoning regulations to ground level. For example I’ve walked Hong Kong Islands’ retail district, and most of my actual walking was inside of buildings through multi-level arcades of retailers, big and small– you didn’t even have to exit to the street- there are many interconnecting pedestrian footbridges that cross the avenues/streets between buildings, if they weren’t already adjoining properties.

    Now imagine instead of all those single-story “taxpayers” (admittedly thinning out as the years go by), those same buildings had a level or three above with restaurants, cafe’s, and other retail businesses….

  • http://www.youtube.com/watch?v=UlsiLOnWCoI Arch Stanton

    Yeah, its called a mall…. I think you might have spent too much time in Hong Kong.

  • http://www.youtube.com/watch?v=UlsiLOnWCoI Arch Stanton

    No that’s not what I’m referring to.

  • http://www.youtube.com/watch?v=UlsiLOnWCoI Arch Stanton

    You need a more talented accountant

  • no-permits

    my accountant is very talented, but he’s not a magician nor a fraud.

  • http://iceberg18.blogspot.com iceberg

    and your point? The article is complaining about the dearth of small-business retail, and if we actually cared less about the aesthetics of the existing building stock and more about preserving small business we would favor looser zoning that allowed for as many small business owners as the market could bear, and not just the fewer big businesses that can afford to outbid the small businesses on the very-limited existing retail space.

    Surely you’d agree that in my counterfactual example, that by having a surfeit of retail space available would tend to break the present olig/mono-poly that property owners have over existing spaces, and would have less incentive to hold a space vacant while waiting for some big business bounce their asking rent.

  • http://www.youtube.com/watch?v=UlsiLOnWCoI Arch Stanton

    More like what’s your point? You think the issue is zoning? that’s ludicrous. If small businesses cannot sustain themselves on the ground floor they certainly are not going to do any better upper floors. Besides, there are many stores on the second floor of buildings on Montague St. and some have had a tough time because of the upstairs location, I think you don’t really have a clue as to what you are talking about or have ever even been in this neighborhood.

  • http://iceberg18.blogspot.com iceberg

    Of course zoning has an impact, and I’ve patronized many businesses like restaurants, cleaners, etc which were located on upper floors, in urban non-mall settings– just not in this part of the country.

    It’s a simple equation of supply & demand- you make retail space less scarce, you will have more small businesses open, and granted not all of them would be successfully operated, but there would be more opportunity and less rent overhead that would otherwise work against them.

  • http://www.youtube.com/watch?v=UlsiLOnWCoI Arch Stanton

    Years ago (80’s), I was blessed with the services of a great accountant “Lou” his main client was a multi million dollar corporation, but being a friend, he also took care of my small potatoes DBA. When he retired, I was forced to hire someone else, who upon first reviewing my books said I owed $35k to the IRS, and almost $10K to the state In shock, I called Lou, he agreed to help me, The next day, Lou called me back and said “write a check to the IRS for $2,200. and one to the State for $700″. I happily did so, then asked him how there could be such a difference in results? He said “Accounting is an art, and just as two different artists can look at the exact same scene and paint two entirely different paintings, two different accountants can look at the exact same set of books and paint two entirely different pictures”. To which I replied “Lou your a Picasso”.
    Lou continued to do my books for a few more years till sadly, he passed away. I have had several other talented accountants since, but none nearly as gifted as Lou.

  • BH

    do you have rental properties with vacancy at this time?

  • BH

    Do you take depreciation on your property for taxes?

  • no-permits

    no, why do you ask?

  • no-permits

    on some i do, on others they are fully depreciated. why do you ask?