Union Square's status as an area for destination dining will soon be diminished, with two longtime restaurants planning to close by the end of the year. Republic, the popular pan-Asian eatery, and Blue Water Grill, the seafood haven housed in an old bank building, both need to seek new spaces after continually rising rents force them both out of their homes of 20 years, according to Bloomberg.
In a report about rent spikes creating "food deserts" in previously gentrified neighborhoods, Bloomberg reveals that the space housing Blue Water Grill is being marketed for $2 million a year in rent, which is too much even for Tilman Fertitta, the billionaire casino owner and restaurant magnate who owns Blue Water Grill's parent company. "Even though this is one of New York's most successful restaurants, it can't be successful with a $2 million plus rent; therefore, we will be relocating within the next year," a spokesperson told the website. "In the meantime, it is business as usual."
Republic owner Jonathan Morr—who was paying $220,000 a year in rent in 1995 when Union Square was "very different than it is today...there was very little there along with the drugs in the park"—will vacate his lease three and a half years early so that he can split the rent with an incoming tenant.
In 2015, Danny Meyer relocated his pioneering Union Square Cafe following "untenable rent escalations" and what he characterized as landlords "using this moment to demand the significantly higher rents they've been waiting for since first betting on their neighborhoods."
The report by Bloomberg predicts Union Square will join the ranks of Brooklyn's Smith Street and Bleecker Street in Manhattan as "dining deserts" where the only businesses able to afford rents are huge chains and...food halls. "They can open in a food hall for very little money," according to tenant broker Stephen Sunderland. "It's limited risk, both incoming and outgoing: If the landlord takes someone and no one wants their food, after a couple of months they can just say, 'hey, I can't pay my rent,' and leave."
Update:Union Square Partnership, a not-for-profit entity that promotes the neighborhood, disagrees with the doom-and-gloom scenario laid out above:
“Union Square’s culinary scene is strong as demonstrated by the 28 new eateries, which have opened in the neighborhood this year alone. With fine-casual eateries, farm-to-table restaurants, new concepts and international outposts, and the City’s largest and most successful Greenmarket, this district possesses one of New York City’s richest culinary mixes,” Jennifer Falk, Executive Director of the Union Square Partnership, said through a spokesperson. “As consumers’ dining habits evolve, Union Square continues to serve as an incubator for new concepts. For example, with fast-casual dining on the rise, Union Square is a go-to location for a long list of new fast-casual eateries that have launched in recent years. In addition, on the other end of the dining spectrum, restaurants with a strong brand and following like Union Square Cafe, have embraced the changes in the industry by evaluating their existing business model, and have innovated and diversified their operations.”