Property Grunt

Sunday, September 13, 2009

The cycle begins

Business Moves Home

Home businesses are nothing new in New York City. For any start up, it is just a lot easier and more cost efficient to do it at home. An amigo of mine works for a very well known hedge fund that started out of an apartment. Awhile back I was watching a Food Network program on Soul Fixins. One of the owners stated that the restaurant first started in their apartment specializing in take out. And with the restaurant and financial industry getting pummeled, I do see more growth in home business associated with these two industries.

Because the commercial real estate market is cratering, commercial landlords will have to take a long hard look at their rents. I think they are also going to be more selective of their tenant pool.

They are going to be more aggressive in finding commercial tenants that require either a storefront or an official commercial location. For example, supermarkets will probably be more attractive to a commercial landlord than a yoga studio. The smart business person will pick those particular businesses where concessions on rent are given because it will lower their operating costs.

In the next ten years, the small business that survive and continue to grow will eventually have to look to commercial space to house their needs. That is when the next boom will arrive.

That is why I can't agree with this statement.

“It is a serious drain on the business community,” said Joseph Strafaci, the owner of Joseph Martin Salon on East 57th Street in Manhattan. “Every downturn, every retraction, those individuals who do freelance work swoop in. Businesses can’t compete with individuals who have no operating expenses.”

This is the beginning of a new era for these small businesses and eventually they will take the place of other established business that have moved on.

People are also exercising lateral thinking in trying to merge their talents with money.

A year and a half ago, Seth Adler, 33, an event producer, realized his dream of becoming a voice-over actor by creating an in-house sound studio in the closet of his one-bedroom apartment in the East Village.

Because the business is self-contained and clients do not come to visit, Mr. Adler believes he is operating within the scope of his lease. And though his business required some home modification, he said he doesn’t think he violated any city codes. He simply stapled panels of sound-blocking egg-crate foam from floor to ceiling in the small closet.

In this homemade studio, Mr. Adler uses his honeyed voice to create 30-second advertising spots. Each earns a couple of hundred dollars, he says.

Were he to use a professional recording studio space, which can cost around $500 per session, he says, “there’s a good shot that I would make no money.”

Though Mr. Adler’s voice-over work is a side pursuit in addition to his full-time job, having a home business has helped ease financial worries.

A 28-year-old renter in Crown Heights, Brooklyn, says his landlord has no idea that he sometimes records and mixes aspiring hip-hop artists and rappers in the living room of the apartment that he shares with his mother and two siblings.

Though he used to have periodic work helping with crowd control at events like the Barneys warehouse sale, he said the jobs stopped coming last February. For the last six months, recording and producing would-be singers and rap stars at the rate of $20 an hour — Mr. Adler says a professional recording studio can cost more than 10 times as much — has been his sole source of income, roughly $10,000 a year.

He said customers accept the unusual setting because of the rock-bottom price and his product. “They are usually cool with it after they hear the sound quality,” he said. “They are like, ‘I did not expect that from the setup.’ ”

With the digital and internet revolution, I am surprised that recording studios are still around. All one needs are some good microphones, a good computer and egg crates and you can create a sound studio anywhere.

Keeping looking around you. More change is on the way.