Union Square Cafe is the latest victim of rentmageddon

A few weeks ago, Wylie Dufresne announced that he had been forced to close his pioneering restaurant WD-50 on the Lower East Side as of 11/30. The reason is that the building will be razed and a new apartment building will go on the site; and said he hoped to reopen elsewhere soon. Then Rouge Tomate announced they will be leaving their spacious locale next to Barney’s as of August 9, citing rent. They will be relocating to an unspecified location “downtown” later this year.

Now, the monstrous Rentmageddon sweeping the NYC restaurants has claimed another scalp: Union Square Cafe. The iconic restaurant that opened 30 years ago on East 16th street and contributed to revitalizing the Union Square has fallen victim to rising rents and will close at the end of next year. USQ also hopes to move to a new location, though one has not been announced. Julia Moskin has a good, if sad, story on the trend in the NYT that is today’s must-read. She says that USQ paid $8/sf or $48,000/yr back when it opened; now the rent may be as high as $650,000 as international retailers, banks, and pharmacies have driven up rents. She also mentions that Marco Canora and partners at Hearth restaurant have been hit with a 65% increase in rent–this year.

Moskin asks Danny Meyer, whose other restaurants include Gramercy Tavern and The Modern as well as Shake Shack, why he doesn’t just pay for a renovation and the increased rent out of his own pocket? Because it doesn’t make financial sense, he says, making the analogy that it would be like doing a million-dollar renovation on a studio apartment.

In twisting the knife for fine dining, the landlord is quoted as saying that he thinks a Shake Shack would do well in the space.

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8 Responses to “Union Square Cafe is the latest victim of rentmageddon”

  1. Maybe this will engender the rise of gourmet food carts around the city. A mobile wine bar would be nice.

  2. We lost the reasonably priced ethnic restaurants–Italian, Chinese, Ethiopian, Vietnamese, etc.–in our neighborhood years ago. And the Upper West Side, which used to be second only to Chinatown for excellent Chinese food, is now pretty much a Chinese-restaurant wasteland. (There is Red Farm, if you don’t mind paying $3 and up per dumpling.) I think the rise of food trucks came about partly because of this trend.

    Now the expensive restaurants are being forced to close. We can thank Bloomberg for this. He said he wanted to make Manhattan a luxury product, and he succeeded. Soon only oligarchs will be able to afford it–or at least be able to afford to eat out here!

  3. Peter – Yes, but I’m sure the NYSLA would take a dim view of such a thing!

    Sharon – We all should have bought taxi medallions 30 years ago as they have apparently been the best performing asset class!

    I’m waiting for the follow-up story–a heatmap, per chance?– of all the restaurants that actually OWN their own spaces and thus are immune from RENTMAGEDDON. (Though they may be tempted to sell into strength…)

  4. Since taxi medallions cost something like a million dollars now, maybe we could buy shares in a medallion??? Or has that horse left the barn?

    As for restaurants that own their own spaces, that’s what my husband always says: The businesses that have survived for a long time bought their buildings a long time ago.

  5. Also Rizzolli the beautifull book store on 57 will close too.

  6. Unfortunately, this phenomenon is not limited to NYC restaurants. It’s happening to homes and businesses all over New York, as well as other cities like San Francisco, Portland, and Austin. The rich get richer, the rest of us get pushed out.

  7. It is interesting that the only previous rent quoted was the first one of $48k; the interesting figure would be the last one before it was raised to $630K.

  8. Typo: $650K


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