On a Friday afternoon in Downtown Brooklyn, Fulton Street is all decked out—open shop doors, loud music, and sidewalks full of busy shoppers. But underneath the colorful scene is a kind of retail war. Smaller retail shops in Downtown Brooklyn are struggling to maintain alongside the many big names, including the high-end and mainstream brands that are becoming consumer staples in this once low-cost shopping area.
Things have been rapidly changing along the entire Fulton Mall shopping strip. According to the annual report of the NYC Department of Small Business Services for fiscal year 2013, seven major retail brands moved into the area and signed leases to set up shop in that one year. These brands include Armani Exchange, Express, and House of Hoops, and they are putting many older, lower-end shops in jeopardy. These new stores are offering higher quality clothing, sometimes at higher prices, but with the draw of popular brands. These mainstream stores can also afford the rising rent rates in Downtown Brooklyn, a neighborhood with a rising income demographic.
One sign of this struggle is the many bold sale stickers in windows and on merchandise. Retailers say that with the influx of larger stores moving into the neighborhood, the markdown signs are absolutely necessary to continue attracting clientele and maintaining financial stability.
Victor (who didn’t want his last name used), a manager at an urban footwear and clothing store, candidly admitted, “We have sales and discounts to stay in competition with everyone else. With the big stores there is always a new price on something that we both have.”
Off-brand shops like Victor’s are at an extreme disadvantage now on the Fulton Mall. In just a one-block radius on Fulton Street between Hoyt and Smith Streets, three major sportswear stores sell the latest trends—rapidly and in large quantity and The Fulton Mall Improvement Association does not plan on bringing this development to a halt. In 2012, Downtown Brooklyn Partnership was awarded a $200,000 Urban Initiatives grant from the New York State Division of Housing and Community Renewal for the Eastern Gateway project used to renovate vacant commercial space in buildings along Flatbush Avenue, from Dekalb Avenue to Lafayette Avenue.
In 2014, the quick revitalization of this major section of the borough seems to be pushing the area to compete on a level with higher-end shopping districts. The local demographics are changing. According to the Brooklyn Real Estate Reports, more than 15,000 new residents moved to Downtown Brooklyn in 2013. Studio rates have increased 1.6 percent and two-bedroom spaces 6.4 percent and the changing demographic of the area demands a higher visual presentation. Walter Morgan, manager of Modell’s in the Fulton Mall made it clear that his Modell’s location was not suffering in sales. But he said the store needed to keep up with the modernized aesthetic of the other mainstream shops in the area. “We closed down for a little while because we had to change the look of the store to fit the façade of the Modell’s located in Barclay’s Center and the other stores in the area.”
Meanwhile, rising rents put pressure on current commercial tenants. Victor, the manager of the small sneaker store said, “It all depends on if the landlords let you stay. When your lease is up, you have to move out or pay more than double your original rent.”
A report by The Pratt Center for Community Development/Development in Downtown Brooklyn noted the negative effects of the construction of the one and a half million square foot City Point building, which currently holds many high-end stores as well as office space. Prior to the completion of the building, the report said:
“Many of the mall’s small business owners operated with month-to-month leases and when some of them questioned their landlord Thor Equities about this, they were reassured that there would continue to be space for them into the future, even in a newly constructed mall. Around the corner from the mall, another group of over 20 small businesses on Willoughby and Bridge Streets (and the residents who live on the upper floors of buildings) has been dealt a similar fate. At the end of April 2007, landlord-developer Al Laboz sent them eviction notices—without any prior warning— giving them one to three months to leave. As of April 30, 2008, all of them will have been evicted.”
Smaller business owners must create ways to remain in the neighborhood or vacate. The Brooklyn Rental Market Report states that commercial spaces of 1500 plus square feet currently run at $972 per square foot in the general Fulton Mall shopping area. In the past year, this rate has gone up approximately more than $300. The Fiscal Year 2013 Business Improvement Annual Report showed that there were 150 occupied storefront shops and two vacant ones.
Morgan at Modells, which he said is owned by the franchise, revealed that there are definitely days when the store does not meet sale quotas. But for the most part, he said, a balance of reasonable prices, a variety of merchandise, and ideal location grants them the security to stay a part of the Fulton Mall area.
Victor, meanwhile, reports that his employer’s smaller sneaker store is hardly keeping afloat in the midst of the ongoing rent increase. He banks on certain days to bring in the majority of his stores income to make ends meet. He says, “Fridays are best. It’s payday.”