Content area
Full Text
(Bloomberg)-In 1995, the restaurateur Jonathan Morr opened a 3,800-square-foot noodle shop called Republic on Union Square West in New York City, paying an annual rent of $220,000. "The rent was relatively inexpensive for what it was," he said. "But remember, when I opened, Union Square was very different than it is today. There was very little there along with the drugs in the park. At the time we were taking a risk."
Twenty-two years later, Union Square has been gentrified beyond recognition. It's home to a Whole Foods supermarket and an apartment building whose penthouse sold for more than $16 million. And now Republic is on its way out. Morr said he expects to close the space by the end of 2017, three and a half years before the lease expires. "It's just a fact of life-there's no way that we're staying there after the lease is up," he said. Taking advantage of an impatient landlord, Morr plans to leave the space early and will "split the difference between what [the landlord] gets from us and what he'll get from the next tenant, and call it a day," he said.
Republic is joining a slow but distinct restaurant exodus from the area, following in the footsteps of Danny Meyer's Union Square Cafe, whose prohibitively high rent forced it to search for a new space in 2015. "There's no such thing as a New York restaurant that's immune to real estate," says Richard Coraine, the chief of staff for Union Square Hospitality Group. He notes that the original, 1985 rent for USQ was $4,500 a month. A roughly fivefold increase over 30 years is what prompted Meyer to move his beloved restaurant to its current home, on a corner a few blocks northeast of Union Square.
The space currently occupied by Blue Water Grill, also on Union Square West, is being formally marketed to potential tenants for close to $2 million a year, according to Leslie Siben, a principal at LB Realty Services LLC, who has been approached about the property. "There's no way there won't be a lot of turnover there as tenants who have been there for a really long time face the notion of 'fair market value,'" she said, adding that the astronomical...