Have you noticed vacant stores in your town?
How can you miss them! Unfortunately, between the rents, taxes on the retail spaces, and the unfortunate advantage that the internet was provided 23 years ago, by not having to charge and pay sales taxes over that time period, and, oh yeh, the “free shipping.”
The retail market has taken a huge hit!
We can also thank Congress for waking up 23 years later and now passing a law for sales tax on all internet sales. I say, “too little too late” and good luck policing and collecting the money!
This has really caused unfair competition; but we all benefited, right?
Not really! As the internet took hold and made shopping so easy, convenient (save gas and time) and more competitive, it has caused many, many Large box stores to go under (Radio Shack, Toys R Us, Sports Authority, etc. How can you compete, when rents are 40-$300 per sq. ft for stores in Long Island and New York City, compared with rents of possibly $8-$25 per foot out in the middle of the country for warehouses, fueling the internet profitability (Mr. Jeff Bezos of Amazon, the richest man on the globe, has 140 billion of our retail money and sales taxes!).
Also, many times special tax breaks by local taxing authorities, our local I.D.A. (Industrial Development Agency), provides P.I.L.O.T.S. and incentives (payments in lieu of taxes) on developments and shopping centers over a 10 year or longer period, to allow builders breaks on construction.
Who pays for those lost taxes, homeowners and other small businesses!
There was a time when there was a certain comfortable community feel prior to the internet, where we all were familiar and friendly with the local, merchant, whether it was for clothes, small supermarkets or whatever you would purchase on the street, which can now be purchased by a click of a mouse!
In the past, if you lost a movie theatre, you lost a town.
Remember Blockbuster Video, where 9,000 stores existed in 2004, then came along Netflix, which knocked them out of the ballpark.
Now of the last three, two closed on July 16 in Alaska and the last one in Bend, Ore., will probably go by the wayside in the very near future!
Who rents videos anymore, when today, streaming movies is done online or on your giant T.V.
People are even eating out less on Saturday nights and are ordering from takeout or regular restaurants who deliver. I even saw a report on the news the other morning, that there are even high-end take-outs that are flourishing, that make really delicious but expensive dishes for delivery.
Will Macy’s, J.C.Penneys, Nordstroms be next in line to go under the knife?
It sure seems that way. What do you think will happen to the taxes they are paying? Homeowners will bear the burden, unless something radical happens in the very near future.
More important, to add insult to injury, the new tax laws have been impacting the high end local and New York City luxury market, where real estate taxes are way up there; but only $10,000 is the maximum one can deduct on their primary residence as per S.A.L.T (state and local taxes).
Previously, we were able to deduct our total real estate taxes, state and local and even sales taxes. In addition, interest on mortgages up to $750,000 are deductible, which was reduced from $1,000,000! (can you imagine if Trump took away the mortgage interest deduction?
Would you still vote for him, next time around?)
The nail is in the coffin for retail.
However, some types of businesses that you cannot buy on the internet, eg. construction, handyman services, repair services, (plumbing, heating, Air Conditioning, electrical) catering, etc. will still flourish in the brick and mortar world of our new internet-based economy.
Most important, is to have as much live and interactive entertainment type venues, on Main Street (like My Father’s Place in Roslyn, that re-open by the entrepreneurial Michael, “Eppy” Epstein) that has reinvigorated the local area with packed crowds every weekend)! The large dinosaurs of malls, strip centers, etc. will continue see much less traffic, as I have noticed lately; but there will always be exceptions to the rule, like Tangier outlet styled malls, who are doing well due to selling higher-end luxury brands and the multitude of choices all in one location.
We need to think outside the box and keep our retail stores viable and the local municipalities absolutely must be very flexible with their rules, because it is a new world out here and bringing the people from other towns and out of their homes again will be the challenge for the future.
If we don’t succeed, local real estate taxes will continue to rise and prices will suffer and the outflow of families and individuals (more are leaving New York State, than are coming in) will continue at even a more rapid pace to other states down south and out west to more “financially” and “real estate tax friendly” environments.
We are creating an “elitist” atmosphere and landscape for only the rich and wealthy!
If you are thinking about it or are ready, I firmly believe that for many homeowners, selling now will be an ideal situation going forward. Is anyone listening?
Phil Raices is the owner/broker of Turn Key Real Estate at 7 Bond St. in Great Neck. He has earned the designations as a graduate of the Realtor Institute and is a certified international property specialist. He can be reached by email:Phil@TurnKeyRealEstate.Com or by cell (516) 647-4289 to answer any of your questions or article suggestions or provide you a free comparative market analysis on your property.
