New York lawmakers seek rent control to protect small businesses

A coalition of state lawmakers and small business groups want to build on New York City Mayor Zohran Mamdani’s campaign pledge to “freeze the rent” and extend rent control to commercial properties like bodegas and mom-and-pop shops.

A new bill would create a commercial rent guidelines board that would set maximum allowable rent increases, standardize lease terms to 10 years and provide commercial tenants with the right to demand written lease agreements.

“ This issue has been around for a while, but it hasn’t had a real champion at the state level,” said Assemblymember Emily Gallagher of Greenpoint, Brooklyn, one of the lead sponsors. “ We’re seeing massive rent hikes that really no local business could afford.”

Gallagher pointed to several businesses in her district that recently closed due to unsustainable rent increases, including the beloved Pencil Factory dive bar. A recent Association for Neighborhood & Housing Development study found commercial rents across Brooklyn increased 25% from 2019 to 2022.

Advocates argue rent stabilization and longer leases would also address the issue of boarded-up corner stores and empty shop windows. City data shows about 12% of storefronts are currently vacant.

Landlords are “keeping storefronts vacant until larger, wealthier tenants come along,” state Sen. Julia Salazar of Brooklyn said in a statement. “This is a toxic and now commonplace pattern that is shuttering our local businesses, putting New Yorkers out of work, and turning our vibrant neighborhoods into chain malls.”

Real estate interests and landlord groups oppose the measure.

“Capping the income of small property owners when the expenses and costs to operate and maintain our buildings rise astronomically year-over-year hasn’t been the answer on the residential rental side, and it certainly isn’t the solution on the commercial retail side either,” Small Property Owners of New York Board President Ann Korchak said in a statement.

“I think it’s terrible,” said Olga Someras, an attorney with the real estate law firm firm Kucker Marino Winiarsky & Bittens. “It doesn’t recognize a lot of the practicalities and the realities around these types of relationships and these types of businesses.”

Someras said commercial leases are not always fixed monthly rents, but rather percentages of revenue. She said the new law would treat a corner bodega the same as a storefront on the ground floor of a 50-foot Manhattan skyscraper.

“It eliminates the ability of a landlord to really work with small businesses,” she said. Someras predicted commercial rent control would actually increase vacancy rates because it “incentivizes landlords really to not rent their space unless there’s a much larger business that’s more credit worthy.”

Unlike residential rent control, there are few examples of commercial rent control programs across the United States. Berkeley, California, passed a series of commercial rent control laws in the 1980s, but they were later invalidated by the state Legislature. In 2020, the Seattle City Council passed a temporary rent control ordinance for small businesses affected by the pandemic, but it sunset two years later.

In New York City, then-Mayor Ed Koch blocked a City Council measure that would’ve regulated commercial rents in 1987.

If the current bill passes in Albany, the mayor would appoint nine members to the new commercial rent guidelines board, similar to the current Rent Guidelines Board.

A spokesperson for Mamdani did not return a request for comment on the new proposal.

“I think that this bill is going to be unstoppable,” Gallagher said. “Every time a small business gets closed, every single person that loved that business goes into mourning, and I think that all of those people are willing to fight.”