Mamdani Adds Millions To Program Helping Retailers Negotiate With Landlords

New York City’s small businesses having trouble navigating the squeeze of rising rents, dwindling availability and soaring expenses are getting a boost from the city.

Mayor Zohran Mamdani doubled the funding for a city program designed to help commercial tenants in lease negotiations in his first municipal budget, up from $4M to $8M. Brokers and advocates say the program smooths out the leasing and opening processes for landlords and tenants alike — critical as the market has gotten more competitive in recent years.

“We’ve heard great things about the program,” said Jessica Walker, president and CEO of the Manhattan Chamber of Commerce. “The problems are that it’s a very small program and currently is only able to help hundreds of businesses instead of the thousands that we have.”

The commercial lease assistance program was introduced in 2018 under then-Mayor Bill de Blasio, following the city council’s passing of a law two years earlier that created new protections for commercial tenants. 

The program, run by the city’s Department of Small Business Services, provides legal assistance to commercial tenants negotiating new leases, renewals, lease terminations and sublets, enforcing lease terms and oral agreements, and fighting breaches of contract by landlords.

Tenant advocacy nonprofit Association for Neighborhood & Housing Development helped push for both the 2016 law and the creation of the commercial lease assistance program because of how much confusion it saw largely minority-owned small businesses face when starting.

“There really isn’t a clear and good standardized commercial lease,” ANHD Executive Director Barika Williams said. “You have a huge variety of what’s being offered in terms of timeline for leases, in terms of lease renewal, in terms of obligation and who pays what of the lease.”

Christofer Akum, CEO and founder of Lifestyle 1104 Juice Bar, said he wishes he had known about SBS’ offerings when he was opening his first location in the Bronx.

While the commercial leasing assistance program helped him open a second location in Hudson Yards, he could have avoided having to redo the plumbing for his Highbridge space three times over to achieve compliance if he had known about those services earlier, he said. 

“The city being able to help us be more compliant, help us understanding what we have to do and how to handle food, that’s very, very important,” Akum said.

The program doesn’t just benefit tenants. It also makes it easier for landlords to lease spaces to small businesses, Cushman & Wakefield Executive Managing Director Steven Soutendijk said.

“It doesn’t benefit a landlord to have a tenant on the other end of one of these negotiations who’s not capable of negotiating to their benefit,” he said. “It’s very helpful to have somebody who knows what they’re doing, and if they don’t know what they’re doing, they have somebody who can help them deal with some of the minutiae.”

The program has been allocated $4M a year for the past three years running due to demand, although an SBS spokesperson didn’t respond to Bisnow’s questions about who received the funding in recent years and whether all of it had been deployed.

The additional funding to help tenants is being put forward by the city at a moment when competition for retail real estate is white-hot.

Average availability in the nine prime corridors tracked by JLL was 11.9% at the end of the first quarter of this year, which is the lowest quarterly rate recorded by the brokerage since it started tracking the corridors in Q3 2017. 

The lack of available space is pushing tenants to take space on side streets, according to the Real Estate Board of New York’s most recent report, rather than to find a spot on another main drag.

Demand is pushing asking rents up, too. While still below the post-Covid peak of $608 per SF achieved a year ago, average asking rents in JLL’s prime submarkets increased from $585 per SF in Q1 to $592 per SF by the end of Q2. Some of the asking-rent dip is attributed to prime space being leased up.

“It’s now a landlords’ market, and landlords are getting multiple offers,” Compass Vice Chair Robin Abrams said. “Tenants are, I think, asking for less incentives and willing to be more aggressive in what they’re offering landlords.”

The new funding aligns with the mayor’s strategy of taking on “bad landlords,” which to date has largely focused on owners of low-cost housing.

It also includes litigation services for business owners who claim their landlords are harassing them, according to Cassio Mendoza, deputy press secretary for economic justice in the mayor’s office.

“The Mamdani administration is continuing to look at ways to further support business owners dealing with commercial rent abuse,” Mendoza said in an email.

Mamdani has also vowed to help small businesses by cutting red tape, last week rolling out 50 measures to reduce bureaucracy, like reducing the number of licenses that barbershops need or the requirement for restaurants to have multiple licenses just to serve ice cream.

The new funding for commercial lease assistance, in addition to removing hurdles for small businesses, shows New Yorkers that Mamdani intends to deliver on campaign promises, Walker said. But the pro-tenant maneuvers are not necessarily indicative that the administration is trying to tip the scales fully toward tenant power.

“I think that the administration understands that, you know, a healthy ecosystem means that we all do well,” she said. “You just can’t have thriving tenants without thriving landlords and thriving buildings.”

Still, there are ways she would like to see the program modified to help more tenants, like creating a standardized lease template for would-be renters that would free up time for SBS staffers to help retail tenants address more complex problems, like eviction hearings. 

“One of the things that we would love to see is to expand the services to potentially help small businesses who lack the means to be able to represent themselves in court,” she said.

Additionally, issues that tenants might struggle with — like a steep rent increase — may not fall within the program’s remit. For example, if a business is renewing a lease after being in place for 20 years, its landlord is likely just calculating new rents to match current market rates, brokers said. 

“There’s an economic decision,” Soutendijk said. “This is lease and legal assistance. It’s not going to make a landlord make an irrational decision on taking a below-market rent.”