Thursday, February 22, 2007

Downtown Changes

Stores are closing and rents are rising since a major property management
acquired downtown property, merchants said this week.

Business owners alleged that Paramount Property Management of Bayonne is tripling rents and forcing an exodus from buildings recently purchased from the Pittis Estate. But Paramount property manager Philip Baum said only those with no lease or expiring leases will be affected. He said for prime properties on Front Street between Park and Watchung avenues rates of $20 to $25 are reasonable.

Photo shop owner Alex Alonso was upset over a possible rent increase until he realized the lease for his Front Street store is in effect until 2010. But his wife, Lillian, said, “We think the rent is high. Nobody can pay this amount. It’s too much.”

“In one year, it will be a ghost town,” her husband said.

Merchants said rates were going as high as $5,000 and $6,000 per month, but could not specify the previous and new rates per square foot.

For those who don’t deal in commercial rentals, rates are quoted in annual rates per square foot. AST Realty rents retail space in the new Park-Madison building at rates from $20 to $23 per square foot, so a 1,000 square-foot store would have a monthly rental of $1,666.66 or $1,916.66. Depending on the terms, a tenant may also have to pay other costs such as taxes, maintenance and insurance.

A commercial real estate web site shows a range of Plainfield rental rates averaging about $18 at four locations, but Paramount is asking $30.86, or $1,800 monthly, for a 700-square foot store on Watchung Avenue near City Hall, a bit higher than Baum’s projection of $20 to $25 per square foot for new leases.

Among closings that concerned merchants were an 89-cent store and a clothing store on the two south corners of Watchung and Front and a martial arts studio and a longtime men’s clothing store, both on Front Street.

But Baum said the 89-cent store closed due to eviction for back rent and a computer store, “which Plainfield hasn’t had,” will be going in.

Choong Hwang, president of the Korean Merchants Association and owner of Ped-Eze, a clothing and shoe store on Front Street, said, “I think there should be a positive and negative impact.”

While agreeing with concerns about triple rent increases, Hwang said the change may bring better tenants and a better retail clientele.

“Most people have a short lease or no lease,” he said.

“I already felt the change,” he said. “I think some early tenants who cannot pay the current rate, they are suffering. They are not able to pay the rent, so they are leaving.”

Hwang said ultimately it’s good for consumers.

“You cannot stop this change,” he said, calling it a nation-wide trend where “big people invest” and “small guys got to leave.”

Hwang said a negative effect would be vacant stores that would make the city look like a ghost town. But he said “Paramount has good connections. They might bring big people here.”

--Bernice Paglia


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