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Union Square Cafe Closing

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I saw this posted by CH Sandiasingh in the food & media news section.

http://ny.eater.com/archives/2014/06/...

This is extremely disappointing. USC is always incredibly reliable with great service and food. Definitely my go to in Union Square. To think that the landlord would raise their rent to $650,000 a year... things are out of control in NYC.

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  1. Rapacious and greedy landlords. But Meyer probably could have gotten it to work somehow. Very sad.

    1. It will never happen but I would like to see the rent gouger landlords (and they aren't all int his category) choke on their properties after they try to strong arm the current tenents into higher rents.

      27 Replies
      1. re: Spiritchaser

        The problem is, and I don't know how this is made possible (tax write offs? Loopholes?) some landlords seem to be able to sit on empty properties.

        The landlord for M. Wells tried to triple their rent and after M. Wells left, the space has sat empty for 4 years and the landlord doesn't seem to care.

        1. re: Pookipichu

          I have pondered this question many times, there are so many empty properties, how does this profit the landlord? It is very strange and a terrible blight.

          1. re: bronwen

            If rents are rising a building that has no tenants is worth more in a sale as there are no leases to encumber the value.

            If markets rents rise, why should a landlord accept less? There is value in a long term tenant but why lease something for 50% of what you could get from someone else? I ask all the posters... if you own your apartment and decide to sell... will you take the lowest offer or the highest?

            1. re: dyrewolf

              Here's a post that discusses some of the factors:

              http://www.ezracompany.com/2012/04/30...

          2. re: Pookipichu

            Are you sure you know the circumstances of why the M. Wells space remains vacant?

            Couldn't it be that they simply haven't received any legit offers due to the location, and old diner layout. They apparently only took it on a trial 1 year lease, which was bad business for all parties involved and shows a lack of confidence, not to mention solvency. Then they didn't want to renew at market rent. So why is the landlord gets blamed for that, or for desiring market rents before signing long term leases?

            Also the idea of landlords sitting on vacancies on purpose doesn't add up. It's not the 80's. Landlords risk losing their insurance on empty spaces.

            1. re: sugartoof

              I definitely know I am not certain of why the M. Wells space remains vacant. What I am certain of is that the space was vacant for years before M. Wells and has been vacant for years after.

              A 1 year trial makes sense when you are leasing a space in a dead location after an economic collapse, I would be shocked if they had taken a multi-year lease. There's confidence, then there's foolhardiness.

              The point you're missing is that the landlord was not attempting to renew at market rent. The landlord was trying to gouge the restaurant at above market. If you have not been to M. Wells, it's in a pretty crappy looking location. Furthermore, the years long vacancy supports that the landlord was asking for too much.

              I don't automatically assume that landlords are greedy or that tenants are innocent lambs, but in this case, the preponderance of evidence points to landlord greed. The owners of M. Wells didn't want to move, they didn't want to close down their restaurant and have to build another one 2 years later. That it would make more sense to shutter your business and start from scratch speaks volumes.

              What disappoints me is that a capitalist system that would have a landlord overreach and shutter a thriving business, is touted as the paradigm for the country. M. Wells put Queens on the culinary map for a lot of people, it brought business into the neighborhood and the overflow, buzz and intangible "it" factor was all doing positive things for the area. None of that was calculated in the rental negotiation, yet this value is priceless for a neighborhood to flourish.

              1. re: Pookipichu

                "The point you're missing is that the landlord was not attempting to renew at market rent. The landlord was trying to gouge the restaurant at above market. If you have not been to M. Wells, it's in a pretty crappy looking location. Furthermore, the years long vacancy supports that the landlord was asking for too much."

                This is nonsense. We have no idea what rents were in that area, or what they asked for.

                We do know that M. Wells ended up in a subsidized location after another diner location fell through.

                No landlord wants to sign a one year lease on commercial. and even write up that contract. To your point, there is a point where the liability is greater than the benefits of leasing the space. If they did it - it's because they were desperate to get it filled. You described the area as being a crappy location, but then begrudge the landlord for not magically being able to fill that crappy location, and presume it's to their benefit somehow. That's a little cruel, actually. You are creating a narrative where they're greedy, which is possible, but the most damning evidence points to M. Wells just being inexperienced, and foolish.

                Nobody in their right mind invests in the startup of a restaurant without a 5 year lease. It just doesn't happen. It shows they didn't even have confidence in their own concept, or it's ability to succeed there.They did, and they got national write ups then almost had to close their business as a result of not having a contract. We frankly don't know the nuts and bolts, if the landlord put out money for tenant improvements, or got stuck with utility bills, or if they collected any rent at all during the trial year. Of course the landlord wants to negotiate at Michelin, four star rent, not like they're some pop up, charity case. Why shouldn't they? M. Wells, need to have negotiated a 5 year lease up front. Now fans of their restaurant expect that landlord to become a philanthropist because of what M. Wells represents to the neighborhood, and food scene, or suffer being scapegoated? It's not an example of an overeaching capitalist system, it's an example of a business owner that didn't sign a lease, and made mistakes.

                1. re: sugartoof

                  "This is nonsense. We have no idea what rents were in that area, or what they asked for."

                  It's not nonsense, as I stated, the space has been empty for years both prior to and after M. Wells. If you cannot glean information from that you are stretching.

                  "No landlord wants to sign a one year lease on commercial. and even write up that contract."

                  You stating it, doesn't make that true. It's exactly what M. Wells and the landlord did, so that's at least one case. According to the article linked, the landlord wanted another short term lease, with a buyout clause.

                  "You described the area as being a crappy location, but then begrudge the landlord for not magically being able to fill that crappy location"

                  The location is crappy. Have you been? It's industrial, empty, dirty and sad looking. Umm and what's cruel about what I said... that the landlord would have been better off keeping M. Wells as a paying tenant instead of leaving the location empty for years. If anyone thinks that's a cruel statement, please chime in.

                  "presume it's to their benefit somehow. That's a little cruel, actually. You are creating a narrative where they're greedy, which is possible"

                  It's the landlord's benefit to have rented the space for the time that M. Wells was there, considering it was empty for years prior and after.

                  "We frankly don't know the nuts and bolts, if the landlord put out money for tenant improvements, or got stuck with utility bills, or if they collected any rent at all during the trial year. Of course the landlord wants to negotiate at Michelin, four star rent, not like they're some pop up, charity case. Why shouldn't they?"

                  M. Wells paid for the construction and for the equipment. And yes, it's not a charity, they were paying rent.

                  How did we go from considering the benefit to the neighborhood to being a charity? I think civic benefit or other moral considerations should be part of business dealings and that the capitalist system has some unhealthy aspects to it. You're saying extreme things as if you simply don't want to believe a landlord could ask for too much rent. It's a little puzzling.

                  http://news.yahoo.com/blogs/new-york/...

                  1. re: Pookipichu

                    "M. Wells paid for the construction and for the equipment. And yes, it's not a charity, they were paying rent. "

                    Reduced rent, without a long term commitment, and you have absolutely no idea what financial participation or terms the landlord agreed to. Would you know if the landlord carried a construction or equipment note or gave rent abatement? I couldn't tell you if Wells ever paid them a dime. Maybe they were tied up in litigation over the space. Who knows? We're not privy to the negotiation details. Let's not judge based on a fantasy narrative or wild assumptions.

                    Your presumption that the landlord is purposely denying the marketplace of the space at their convenience is naive. Again, how would you know they haven't been in constant negotiations with Batali, and Jean George? Your assumption that it's current vacancy indicates an unrealistic rent, or unmotivated landlord is pretty ignorant that it can take years to find a qualified occupant, especially in a crappy area. A problem, unqualified, bad tenant can cost you a lot of money. It's frankly none or our business, as long as they pay taxes on it. I'm sure they'd love to find a great tenant.

                    Your expectation that landlords should reduce rents for 4 star chefs based on value to the community as if they're community centers and charities, is silly. Is M. Wells allowed to make a profit? But not their landlords?

                    1. re: sugartoof

                      In one breath you're making fantasy narratives and wild assumptions while in another you're telling me that we shouldn't, so I'll just nod my "naive and ignorant" head and you can keep believing that landlords are always rational, reasonable and right minded victims of greedy non-landholders, before this thread gets any more cuckoo.

                      1. re: Pookipichu

                        Well my point is we don't know the details. You chose to target restaurant landlords casting them as irrational, and unreasonable, wrongheaded perpetrators without factoring in the variables or the possibilities such as I mentioned. Your rants about capitalism are based on biased conjecture.

                        Do you know the exact rent and terms?
                        Do you know that they've turned down qualified tenants?

                        Then why bring up M. Wells situation if not privy?

                        You're absolutely wrong to think M. Wells made a wise business choice by taking a one year lease. It's one detail we do know about, it's very abnormal, and it proved to be a mistake resulting in closure.

                        1. re: sugartoof

                          Maybe your point is we don't know the details but you're exaggerating my points, distorting them, insulting me, while making the fantasy narratives and wild assumptions you're decrying. I've made my points, you can read into it how you wish.

                          I brought up M. Wells because I know the area, I've seen the property, I have first hand experience, I've talked with the owners of M. Wells before they moved and asked them why they were moving. It was a very tough decision for them. It's a lot of work, effort, time to build a restaurant then have to move.

                          Firstly, I didn't say M. Wells made a wise business choice, I was trying to show you your hyperbole about business openings was extreme considering people would take 1 year leases under the circumstances I described. Secondly, you are not being logical and you are jumping to conclusions that are not in my statements.

                          Lastly if M. Well's 1 year lease was a poor business move, it certainly didn't seem to benefit the landlord either. The former M. Wells space continues to sit empty and that section of town has lost the vitality and foot traffic the restaurant brought. You don't live there so you don't care, no problem. But your defense of landlords verges on dogmatic when my position is not.

                          1. re: Pookipichu

                            M. Wells would probably be the exemplar case of landlord making a bad decision.

                            Up and coming restaurant in a completely dead area, revitalizing said area, why wouldn't the landlord be more cooperative? (It would be like if Roberta's got shutdown after a year.) I have to wonder how bad was the negotiation for that breakup to occur.

                            M. Wells situation is different from USC though, Meyer made his fortune from there already.

                            1. re: villainx

                              "why wouldn't the landlord be more cooperative"

                              We don't know that they weren't. It's not their civic duty however.

                              1. re: sugartoof

                                "Then they didn't want to renew at market rent."

                                We don't know they they didn't.

                                "We have no idea what rents were in that area, or what they asked for."

                                Or what M. Wells turned down.

                                "Of course the landlord wants to negotiate at Michelin, four star rent"

                                If that's what the landlord wanted, it wouldn't be possible in that area!

                                "Again, how would you know they haven't been in constant negotiations with Batali, and Jean George?"

                                Are you familiar with M. Wells and the surrounding area? A little?

                                "these situations are complicated and are sometimes of no fault to a landlord."

                                and sometimes are of fault to the landlord too, right?

                                1. re: villainx

                                  "Then they didn't want to renew at market rent."

                                  We don't know they they didn't. "

                                  So you don't think they're consider a renewal offer at market rent equally astronomical? It might be why they chose not to take a pre-existing restaurant vacancy off the market (you know, to better LIC) for their steakhouse project, and opted to build out a warehouse instead.

                                  There is no such thing as a "little over a year" lease, by the way.

                            2. re: Pookipichu

                              "people would take 1 year leases under the circumstances I described. "

                              Not unless they were really foolish.
                              As I said, it didn't benefit any parties involved.

                              I'm not defending landlords, I'm explaining why these situations are complicated and are sometimes of no fault to a landlord. The idea that a landlord prefers to keep a vacancy is libelous.

                              1. re: sugartoof

                                My quote:

                                "The problem is, and I don't know how this is made possible (tax write offs? Loopholes?) some landlords seem to be able to sit on empty properties."

                                I think what I wrote is pretty mild.

                                Your quote:

                                "The idea that a landlord prefers to keep a vacancy is libelous."

                                We're not speaking the same language. My words are going in your ears and being translated into something extreme that you want to think I'm saying so you can make your points, points that are of disputable accuracy. Some helpful articles were linked by other CHers that answered some of my questions and showed situations where landlords prefer a vacancy due to accounting magic. A property can be appraised for more money if the capitalization rate is kept at a theoretical market rental rate vs.what the market can actually bear.

                                1. re: Pookipichu

                                  Let me make it very clear to you. Your statement may prove hurtful to a well meaning landlord who simply hasn't found a qualified tenant. They exist. Sorry you can't fathom that. Rent is more benefit than these dubious write offs and loopholes you're accusing them of.

                                  Characterizing these unknown landlords negatively because you're a fan of their former tenant is wrong.

                                  1. re: sugartoof

                                    Okay here's some actual information regarding the accusations:

                                    "The landlord sensed the neighborhood's new energy and after a year jacked up the rent from $2,000 to over $25,000."
                                    http://www.papermag.com/2012/05/m_wel...

                                    That's according to M. Wells, so presuming that's reliable, it's certainly a jump up.

                                    1. re: sugartoof

                                      "Your statement may prove hurtful to a well meaning landlord"

                                      hahahahaha. though I wouldn't categorize Pookipichu query as an indictment on all landlords.

                                      "Characterizing these unknown landlords negatively because you're a fan of their former tenant is wrong."

                                      my first comment in this thread was pro-landlord, for what it is worth.

                                      did you every respond regarding familiarity with M. Wells location/neighborhood? cuz, it's not what you think it is.

                                      1. re: villainx

                                        I'm familiar with the neighborhood, I just find it trivial.

              2. re: Spiritchaser

                There's a place near us that had a wonderful children's shoe store that I used to frequent with my son. They closed because the rent was being raised to an impossible level. The storefront stayed empty for 7 years. I hope that happens at the Union Sq Cafe location. They should be bowing at Meyer's feet since he helped that area -- which was an absolute dump when he opened -- become as upscale and desired as it is.

                1. re: roxlet

                  That was my point too. Maybe someone could shed some light on this, but there are landlords who seem to prefer an empty property vs. keeping a paying tenant.

                  1. re: Pookipichu

                    Eh. USQ's rent sounds extreme, if it's beeing reported correctly, but the flipside is, if as a property owner you see NY is booming, and you know you're well below market value, the only chance you have to raise your rent up is on renewal. Putting in someone at a reduced rent today may bite you later.

                    If a Danny Meyer wants a 10 year lease, with a 10 year option, then there will often be limited fair market or cost of living increases within that 20 year period, meaning, limited opportunities to stay at market rent during the lifespan of the lease, to 2024, or 2034. His last renewal could have been in 1994, and putting him well below current rates. A landlord might be willing to lose rent for a couple years rather than collect low rents, and devalue their property by locking themselves into a long term lease at a sweethearts deal. After all, USQ has raised their prices over the span of their lease too.

                    1. re: Pookipichu

                      Didn't one Eater article on this mention Bobby's Flay's place closing and that its now a TD Bank. Would TD Bank pay $650,000 to take USC's place? Or the Shake Shack was also mentioned. Think the $650,000 a year is still too steep for anybody!

                  2. re: Spiritchaser

                    It's impossible to say what the situation is for the landlord.

                    I notice they don't say what their existing lease terms were.

                    USC could have had an advantageous lease for a long time.

                  3. Related:
                    http://nypost.com/2014/04/26/the-hidd...

                    1. Came on here to post about this. Am kind of shocked.
                      I can see WD-50 closing but now USC? That place is beloved by locals and travelling foodies alike.
                      What will be next? Eleven Madison Park?

                      9 Replies
                      1. re: globocity

                        I am incredibly disappointed but not shocked. The space will probably become a bank or a duane reade. Because the people who live in the neighborhood really need another bank and because people really want to come to NYC from all over the world to find every street is a bank or chain store....

                        1. re: Pookipichu

                          Or a Starbuck's?

                          1. re: globocity

                            Or a mall store. I lived in the West Village for 25 years, back in the day when it was dangerous to walk in the meat market at night, and the only restaurant was Frank's until Florent opened. Now, every store is a mall store (Jeffrey is the exception) that you could find almost anywhere. They pay high rents. It's depressingly homogenized.

                            1. re: roxlet

                              I can definitely use another $5 shirt from H&M.
                              Every corner, Starbucks and H&M are popping up like crazy.

                          2. re: Pookipichu

                            Hasn't Duane Reade been acquired by Walgreens? And doesn't Union Square already have one of each?

                            1. re: bcc

                              There's already a Walgreens and Duane Reade on the same stretch of 14th at Union Square.

                              1. re: sugartoof

                                It doesn't matter. Those stores breed like cockroaches.

                                1. re: roxlet

                                  Agree. especially in that area from 14th to 28th.

                                  1. re: roxlet

                                    "... breed like cockroaches."
                                    Oh, well said.

                          3. "It will forfeit its lease at the end of next year..."

                            USC will be open for another 18 months. There's still plenty of time to enjoy it.

                            1. It's been a nearly 30 year run; Meyer started out and continued for years at below market rents ($48,000/yr back then). He said the costs of renovation and upgrading are high enough now that it makes the new rent, which he could afford, impossible. His empire is vast, and wealthy, and while I'll mourn the loss of USC if he does not re-open it somewhere else, it's a different Union Square. I wouldn't put it past Meyer to open a re-imagined USC somewhere else, like, say, the Upper West Side, which needs it. Closing the USC after 30 years does not, alas, automatically signal the end of New York as we knew it.

                              1. Many of these landlords at actually property conglomerates that own properties all over NYC, Chicago, LA, San Fran.....One property sitting vacant out of 100 is barely a blip on their bottom line. Dont assume these "landlords" are a single person or this is their only property. Its just not likely.

                                1 Reply
                                1. re: princeofpork3

                                  Often true in Manhattan, less so of a diner car in Long Island City.

                                  Property groups rarely leave money on the table though. They might hold out for a high ticket renter (banks, convenience stores) but the don't take the locations off the market entirely.

                                2. Nooooo!! USC was my first tentative entree into high end (or whatever you care to call it) dining in NY. On previous visits, I had only really eaten in diners. USC was mentioned in one of Nigella Lawson's books, and I tried it and have been back many times since. Had some great meals, talked to lovely folk while eating at the bar. Unlikely I'll get over to US more than once more before end of 2015 so will have to make the most of it,

                                  1. Another take.http://nypost.com/2014/06/25/a-new-yo...

                                    3 Replies
                                    1. re: bob96

                                      Bingo.

                                      Danny Meyer keeps expending his Shake Shack chain despite rents.

                                      1. re: bob96

                                        Thanks, bob96 for this extremely rational take. At minimum, it is an interesting excuse. USC has been around a very, very, very long time. How many NY or name-your-city restaurants have enjoyed this kind of success and celebrity? Concepts and trends come, succeed, are copied ad nauseam. Sometimes it's time to go,

                                        1. re: mangeur

                                          exactly. i thought the real reason was they wanted to close the restaurant. reality is probably a combination of that and the lease all being a good excuse. usc had a great run, i always had a nice meal and of course even tho its nonchowhoundy of me to say this, i will miss that patented, refreshing, unnewyorky friendly service.