New York state lawmakers are considering a commercial rent control bill that would mirror protections for residential tenants, but retail landlords argue the unique complexities of their leases would make such a law difficult, if not impossible, to implement.
The legislation, sponsored by State Senator Julia Salazar and Assembly Member Emily Gallagher, proposes the creation of a commercial Rent Guidelines Board. This nine-person, mayor-appointed board would set maximum annual rent increases for commercial properties. The bill also seeks to grant tenants the right to lease renewals and establish 10-year lease terms as the standard, aiming to protect small businesses from sudden and unsustainable rent hikes.
Proponents argue the measure is a necessary response to a crisis facing local businesses. They contend that landlords are increasingly pushing out smaller tenants in favor of larger, wealthier corporations or leaving storefronts vacant while waiting for a high-paying tenant. This trend, they say, threatens the character and economic diversity of New York City’s neighborhoods.
The push for regulation highlights a tension that has defined areas like SoHo for decades. The neighborhood, once an industrial district, transformed into an artists' enclave in the 1960s and '70s before evolving into the luxury retail hub it is today. This history of transformation underscores the ongoing debate about affordability and the preservation of local businesses in the face of intense real estate pressure.
Proponents champion stability for small business
Advocates for the bill say it provides a critical lifeline for small businesses struggling with unpredictable and escalating rents. Assembly Member Gallagher has been vocal about the need to curb what she calls "massive rent hikes that really no local business could afford."
In a statement, Senator Salazar claimed that some landlords are intentionally warehousing storefronts "until larger, wealthier tenants come along," a practice that contributes to neighborhood blight and stifles opportunities for local entrepreneurs. The bill’s sponsors believe that by regulating rent increases and guaranteeing lease renewals, the city can foster a more stable and predictable environment for the small shops, restaurants, and services that form the backbone of local communities.
To rally support, Gallagher is organizing an event at Jimmy's Corner, a bar near Times Square whose landlord, she says, is refusing to renew its lease. The situation at the local bar is presented as a real-world example of the instability the legislation aims to prevent.
Landlords cite complex lease structures
At Bisnow’s recent New York City Retail Conference, property owners pushed back, asserting that commercial leases are far more sophisticated than their residential counterparts. The "math" for each tenant is different, making a one-size-fits-all approach unworkable.
"One tenant could be doing $3,000 a square foot, versus another tenant could only be doing $100 a square foot," said Sunny Choi, head of leasing at Madison International Realty, noting that every retailer has a different formula for calculating what they can afford to pay.
This complexity has only deepened as retail evolves. Many modern leases include "percentage-rent" clauses, where tenants pay a base amount plus a percentage of their sales. According to The Wall Street Journal, this model creates major disagreements over how to define a "sale." For example, it is often unclear if revenue from online orders fulfilled in-store, or purchases made online and returned at the shop, should count toward the store's sales totals. These nuances, landlords argue, would complicate the enforcement of any standardized rent cap.
We do want them to be there long term. So, if we have an idea of where their sales thresholds are and what their occupancy costs are, we try to price accordingly.
Randall Briskin, vice president of retail leasing for The Feil Organization, disputed the claim that landlords warehouse properties. He stated that spaces are rarely kept empty unless a landlord is planning a complete redevelopment. He added that while landlords could comply with the bill’s data collection mandates, which are similar to existing city requirements, the core concept of rent stabilization is not transferable to storefronts. "The math is the math," Briskin said. "It's not going to happen."
A tale of two markets
The debate unfolds against a backdrop of a fractured retail market. In prime corridors like Times Square, retail is recovering strongly from the pandemic. For instance, rising real estate taxes are prompting funding debates in other regions. According to a Cushman & Wakefield report, asking rents in the Times Square bowtie reached $1,597 per square foot at the end of 2025, a 2.8% increase year-over-year, while availability fell from 17.5% to 15.8%.
The recent opening of a 20,000-square-foot flagship store for Babylist in SoHo is another sign of health in prime locations. Investors also continue to show confidence in the area, with recent deals like the $17.2 million acquisition of two Prince Street properties.
However, citywide data paints a less rosy picture. A Bisnow analysis of city data found that roughly 12% of all retail spaces in New York City were vacant at the end of 2024. This broader vacancy rate suggests that while high-profile areas are thriving, many other neighborhoods are struggling, lending weight to arguments from both sides of the debate.
This is not the first time lawmakers have attempted to introduce such a measure. A similar proposal was introduced in 2020 by then-Assembly Member Danny O’Donnell but failed to gain traction. With the current bill carried over from last year’s session, its sponsors are hoping the growing urgency surrounding small business survival will lead to a different outcome. As the legislative session continues, both business owners and property owners will be watching closely to see if the state decides to intervene in the commercial real estate market.
