Cobble Hill: The Squeeze on Small Businesses

How mom-and-pop stores struggle—and strategize—to pay the rent

The Chocolate Room’s Co-owner, Jon W. Payson, prepares desserts for his customers.(Tiana Hunt/NYCityLens)

 

Part of the charm of Cobble Hill’s commercial district has long been the small and often family-owned businesses that lined the neighborhood’s main commercial avenue, Court Street. But over the past 10 years rents have more than tripled on Court Street. A neighborhood once dominated by distinguished and distinctive independent businesses is now full of chain stores.

In Cobble Hill, retailers are bidding up the prices of roughly 1,000-square foot spaces to approximately $150 per square foot. Years ago the average rent was between $35 per square foot to $50 per square foot, according to the 2017 Brooklyn Retail Report, from the real estate firm CPEX. Mom and pop businesses such as Book Court, American Beer Distributing Company, Café Pedlar, and Sugar Shop—all once on Court Street—are closed. Over the past decade, chain stores such as CVS, Starbucks, Marshalls, Barney’s, Buffalo Exchange, and Urban Outfitters have replaced some of those mom and pop stores.

Small business owners who remain say they are working hard but they face increasing challenges.  Here are some of their strategies and stories:

The Chocolate Room on 269 Court Street has been in the neighborhood for more than 10 years. As the name suggests, the Chocolate Room is full of desserts, and the smell of chocolate is in the air. The staff is always smiling and they are always playing urban music. The co-owners, Jon W. Payson and Naomi Payson, are still fulfilling their dream—to provide a tasty and sweet dessert business for their Cobble Hill customers.

Payson is fortunate to have large regular contracts help sustain the business. The Chocolate Room has a wholesale account with The Barclay Center, for example, and recently signed a contract with Uber Eats, the food delivery platform powered by Uber. The store also has a second location on Fifth Avenue in Park Slope.

Payson says the key to keeping loyal customers is to consistently serve high-quality products and focus on customer service.  He says he makes sure his staff is well taken care of so they can take care of his customers. According to Payson, many of those customers enjoy the shop’s Chocolate Layer Cake or its Brownie Sundae. All of the products are made in-house using only fresh and natural ingredients.

“It is an ongoing struggle for all of the small businesses here,” Payson says. “Rising rents are tough. I do not know if we will be able to sustain this location much longer.” Payson worries about some of the vacant spaces that surround The Chocolate Room. He says landlords are seeking to charge rents ranging from $12,000 to $15,000 a month. Many mom and pop businesses cannot afford the new rental rates. The companies that can afford high rents are banks and corporations.

But the greatest change that Payson says he has seen is the loss of foot traffic. There have not been as many people walking through the neighborhoods as there were five years ago, he says. He says a lot of the residents that lived in the neighborhood moved out because their rent was too high. “Families are buying townhouses that five years ago were the residences of mostly apartment dwellers,” he says. “A downside of having more townhomes is having empty storefronts. Landlords are okay with empty storefronts because of lucrative tax write-off for unimproved property.” 

Cobble Hill needs a healthy mix of corporations and mom and pops businesses, Payson says.

Today Payton’s management practices include a focus daily on budgeting, product placement, controlling prices, and searching for new sources of income. He is figuring out how to continue to pay his rising rent in Cobble Hill.

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Sal Augusta, the owner of Cobble Hill Cleaners. (Tiana Hunt/NYCityLens)

The Cobble Hill Cleaners on 226 Court Street, has been a family-owned business for 16 years. Sal Augusta is the proud owner who, over the years, he says, has seen more families with children move into the neighborhood.  He says many of the older people in the neighborhood died or moved out because of rising rents.

If a business is not service oriented it is very difficult to stay in business, Augusta says, “More corporations coming to the neighborhood is definitely not a good thing for small businesses because small businesses have to pay expenses, rent, labor, and maintain equipment,” he says.

“Small businesses are the life support of the community,” Augusta adds. “In the future, I believe retail rents are going to come down, it is only a matter of time.”

The Cobble Hills Cleaners wants residents in the neighborhood to know that it is important to support small businesses. “You are supporting a kid’s braces or college instead of corporations, CEOs,” Augusta says.

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Zach Goeringo, manager of Zap Wines and Spirits. (Tiana Hunt, NYCityLens)

Zap Wines and Spirits, at 105 Court Street, has been in Cobble Hill for more than 20 years. On the plus side, many businesses on Court Street— like the Regal Cinema, which has been opened for about 18 years, and Barnes and Noble—bring Zap Wines and Spirits more customers. But Zach Goeringo, the manager and son of the owner of Zap Wines and Spirits, says he has also seen a change in the businesses in the neighborhood.

“Like three stores would close next to each other and then the landlords would just turn it into one store and they would rent it out to a bank or a corporation that can afford it,” Goeringo said. “It is good for landlords I’m sure, but now there are three people that are out of business.” Goeringo hopes that rent goes down so more mom and pop businesses can come back to the neighborhood.

He says the staff works hard to offer good customer service and to build customer loyalty. Special occasion days, like Valentine’s Day, keep the staff of Zap Wines and Spirits busy. One customer favorite is Tito’s Vodka.

Goeringo agrees that landlords’ desire for high rents contributes to Cobble Hill evolving into a prestigious neighborhood, but one with fewer mom and pop small businesses and more chain stores.

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The Brazen Head, nearby at 228 Atlantic Ave., was one of the original bars in the area, and has been in Cobble Hill for more than 18 years.When Alexandra Kotlyar first came to the neighborhood, she says, her bar was in the middle of two parking lots. Now she is surrounded by a few mom and pop businesses and chain stores. The bar plays all types of music and they have beer, wine, and liquor. The customers love to go to the back of the bar just to play darts.

The way that the Brazen Head keeps its customers, Kotlyar says, is by always having a good attitude and building relationships.

“A lot of other businesses, they have not lasted that long at all. The ones that we have near this bar probably lasted two to three-years top.” Kotlyar said. “Eventually we are going to try to renew our lease and that is the scary point for us.”

That “scary point” is coming. In two years she will have to negotiate a new lease with her landlord. 

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Adam Lathan and Thomas Clay are co-owners of The Gumbo Bros. Restaurant, on 224 Atlantic Ave. Lathan and Clay have been partners since September 2014. For three years before that, they were catering Cajun and Creole food all around Louisiana. Then, they had an epiphany—that there needs to be more Creole food in New York. The two started looking for spaces in Brooklyn. In December 2016 they opened up the storefront in Cobble Hill.

“There is a great community of, I guess, what is left of the smaller shops around here,” Lathan said. Many of the nearby independent businesses that are around refer their customers to their restaurant, the two say. For example, the Brazen Hazen bar next door has liquor but no food. So when their customers are hungry, staff members will most likely The Gumbo Bros. The customers’ favorites are the gumbo, the Po boys, and jambalaya, according to Lathan.

Clay says it is a shame that so many mom and pop stores are closing down so frequently. But he does think that the chain stores are a big help when it comes to building up foot traffic in the neighborhood. “The people in the neighborhood are very nice and receptive. They would like to keep small businesses in the neighborhood.” Clay says.

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Joseph Deluca is the owner of the CPR Cell Phone Repair, at 226 Atlantic Avenue, which, has been in the area for more than five years. CPR Cell Phone Repair does not only repairs cell phones but it also fixes tablets, laptops, iPods, and drones. Over the years the shop has worked on various technology for production studios that have shot movies and small productions in Cobble Hill.

Deluca says that the chain stores popping up in the area have been good for his business because they bring in more customers. He says he puts a lot of his focus on building a quality business.

“I just went through a year-long negotiation with my landlord. My rent went up significantly and it does hurt,” Deluca said. “I was able to negotiate a five-year lease with a renewal period for another five years, so I am able to know my expenses. I do believe that there needs to be a sensible discussion about rent. On ways to make it more affordable for smaller businesses.”

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