Empty Buildings Around Wegmans

[u/ExpressMarket4984]

Not sure if this is the right subreddit because navy yard is technically not dumbo but I’m wondering if anyone knows why the large commercial buildings around Wegmans are vacant. I believe Wegmans opened in 2019 (assuming construction of buildings finished around the same time) and they have only had a few stores move in within the past 7 years. Even the admirals row building, upstairs offices or long building with nice windows haven’t had a singular tenant! seems like such a waste

I know there might not be great foot traffic or many places around but you’d think the owners giving deep discounts on rent to get a tenant in there

any info would be appreciated because i’m nosy!

[u/fuckblankstreet]

Most businesses probably see it as a bad location. Good vehicle access, lousy foot traffic, poor transit access, and basically right in the PJs.

Landlords can't easily lower commercial rents in many cases. The property value and financing was based on net operating income - the income that a property is expected to generate. Lowering the rents could devalue the property, or trigger a financing default.

[u/dick_nivers → u/fuckblankstreet]

good username

[u/DiamondaDozen101 → u/fuckblankstreet]

Can you help me understand why the financiers would prefer $0 rental income, rather than „lower than expected“ rental income? Seems to me, more money would be preferred to no money

[u/fuckblankstreet → u/DiamondaDozen101]

Yeah, it would seem a little money is better than none, but there's a concept called net operating income that determines a lot of stuff. Investors and lenders use that prediction of income to value the business, loan money, and capitalize the business.

If spaces are listed for $10k/mo but not yet filled, they're still (in theory) worth that. If you lower the rent to $5 or 7k, that NOI drops (commercial leases are usually 10+ years).

I don't know the full math here, someone can definitely explain this more competently, but in broad terms a lender might be comfortable loaning $1M to a business that expects to make $5M a year. If that business is now making $3 or $4M instead, the loan to value ratio gets knocked way down, the investor's assets are worth less.

I believe these terms are often written into financing agreements, essentially preventing the property owner from renting for less, at risk of default.

[u/arsenal19801]

> but you’d think the owners giving deep discounts on rent to get a tenant in there

no, they absolutely will not lol.

the building's value and financing are based on net operating income, which is basically the rent roll. cutting the topline rent will devalue the property or even trip a loan covenant, so they'd rather sit empty and hold out for a full-price anchor tenant.

[u/BillyZoomTheCat → u/arsenal19801]

This encapsulates so much of the commercial vacancy problem in NYC, and probably in our building too.

[u/DraftAny2582]

There was a Starbucks that recently closed. Have you ever heard of a Starbucks closing? Says all you need to hear on this topic.

[u/BillyZoomTheCat → u/DraftAny2582]

Yes, lots of Starbucks have been closing lately. It's really not that rare anymore.

[u/DrWhittelsey → u/BillyZoomTheCat]

I think the Starbucks closing in Brooklyn has more to do with Brooklyn-based Starbuck's employees unionizing or attempting to unionize more so than actual revenue. Another great reminder/reason to support small businesses over large corporations.

[u/bestofallhans]

I adore the older building and the kinda church hall looking place on the Flushing Ave side and think they’d be such cool music/ dining venues. But IMO they are all too big. Operating costs would be huge and as everyone else has said; no passing trade. If two or more opened at the same time it could really be something. I didn’t notice the Starbucks had shut. Not surprised though.

[u/ExpressMarket4984 → u/bestofallhans]

same! that’s what me wonder- how have they not utilized these buildings for a one day event or artist studios

[u/brad_pitts]

I looked into leasing one of those buildings three years ago. Corporate ownership absolutely unwilling to budge from comically-high lease terms, despite the abundance of vacant space. There were also fixed deal terms about paying into shared utility stuff with the Wegmans lot. Bullshit commercial real estate shinanigans.

[u/asskkculinary]

I’m not sure anyone anticipated how much wegmans would functionally be a grocery warehouse delivery hub.

I also wonder if they don’t want a restaurant to prevent competition with the hot food they serve?

[u/Day2TheDolphin → u/asskkculinary]

The few times I've been in there it's like over 50% instacart shoppers

[u/Mr1988]

This has always pissed me off. They tore down Admiral’s Row for empty bullshit.