NYCHA’s Use of Commercial Spaces Leaves Experts Confused

At least 65 retail spaces are tagged as vacant in March. (Getty, iStock)

New York City’s massive social housing system includes nearly 170,000 apartments serving more than 350,000 people, or 1 in every 15 city residents, spread across more than 2,000 buildings.

But while the New York City Housing Authority’s footprint is large, commercial space, including retail, makes up a relatively small portion of its square footage. NYCHA has approximately 2.5 million square feet of non-residential space dedicated to community uses across its portfolio, according to the agency. There is approximately 230,000 square feet of retail space.

A request for public archives filed by The real deal found that the housing authority buildings house hundreds of commercial spaces, at least 65 of which were labeled as vacant in March.

However, usage restrictions, vacancies, and complicated application procedures have left experts questioning whether NYCHA views these spaces as a revenue-generating opportunity – something the besieged agency desperately needs – or as an afterthought.

“In a way, the sky is the limit, in terms of how NYCHA can use the retail space it has to promote economic opportunities with this population,” said Luis Henriquez Carrero, director of litigation at Manhattan Legal Service. “So as long as it doesn’t do that at all, it’s a real problem.”

According to a spokesperson for NYCHA, commercial space within its properties is intended to generate revenue for the agency. They are home to different types of businesses – laundromats, mini markets, hair salons and others. Stores vary in size from 400 to 10,000 square feet and the current rent for a space is generally the market rate.

The vacancy rate for all NYCHA commercial spaces in the second quarter is 7%, according to the agency, with vacancy rates typically fluctuating between 5 and 11%. For community spaces, the current vacancy rate is 15 percent, which is relatively static.

And like many homeowners across town, the pandemic has led to a sharp drop in income. In 2020, the agency received $ 4.6 million in commercial leases, up from $ 6.2 million in 2019, according to a NYCHA spokesperson.

A 2015 report noted that NYCHA has a “strong and established practice for leasing its commendable retail space,” but those looking to fill its spaces haven’t always found this to be the case.

NYCHA Polo Grounds Houses in Harlem (Getty)

NYCHA Polo Grounds Houses in Harlem (Getty)

Arthur Kats, director of the Microenterprise project at Volunteers of Legal Service, a non-profit organization that provides pro bono legal services, said that while working with a client seeking to lease NYCHA commercial space, some properties listed as vacant do not would not be available for hire, for reasons that were not always clear.

In buildings undergoing rental aid demonstration conversion, a process that allows a nonprofit or for-profit entity to own and manage property, NYCHA suspends both new leases and renewals. of leases, which means that some spaces will remain vacant for years. NYCHA plans to eventually convert nearly a third of its public housing stock – around 62,000 apartments – to private management.

It is not known how many commercial RAD properties will impact, but the developers who will come in to manage the property will be tasked with finding new tenants, who should be “in tune with the needs of the resident population”.

But there are also usage restrictions that limit which businesses can open, which could also deter profitable tenants from renting the spaces. Bars, liquor stores, art galleries and pawn shops are completely off limits on NYCHA properties, while restaurants can only open in certain areas where they have been protected. Some rental spaces note that they cannot be used for groceries or delicatessen, but no reason is given as to why.

These restrictions may be inconsistent with NYCHA’s goals, experts say. Limiting grocery stores, for example, is a problem in food deserts. A 2016 Manhattan Institute report found that 180 of NYCHA’s properties are located in areas classified by the city as “underserved,” or having less than three square feet of supermarket area per capita. Some large NYCHA properties are located more than half a mile from the nearest supermarket.

Some experts also believe that NYCHA could do more to encourage entrepreneurship among its residents, who do not have priority among lease applicants. The authority requires rental applicants to have experience running a business and cash, as well as the ability to pass a credit check and background check.

“It comes back to the question of what is NYCHA’s goal with this space,” said Henriquez Carrero.

The housing authority is in dire financial straits, with about $ 40 billion needed to bring its portfolio to a good state, and its capital needs are growing by about $ 1 billion every year. But we don’t know if, or even how, retailing fits into this. A 2020 “Master plan for change” compiled by the agency lists the different ways to raise capital (including RAD conversions), as well as ways to bring more jobs to NYCHA residents, but retail is not mentioned once .

Louis Flores, a member of the activist group Fight for NYCHA – which works primarily to protest RAD conversions – said he believes these commercial spaces should be leased to companies that will serve residents’ needs, such as internet cafes, after school. small business programs or incubators. While the advocacy group does not support profits from public goods, it too is unsure of NYCHA’s intention with their commercial spaces.

“I doubt NYCHA is even trying to make money from that space… if it did, that would be one of the options he would talk about raising money for NYCHA,” Flores said. “They’re not even talking about using retail to help bail out some of the public housing developments.”

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