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What’s Up With That Abandoned Building? The Mysterious Case of 341 Grand St.

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Editor’s note: If you’re a curious sort, you’ve probably walked past an abandoned building from time to time, and wondered, “what’s going on there?” This is exactly what happened to Lower East Side resident Ben Lerman, a comedian, writer and musician. Ben began doing some citizen sleuthing recently, and then pitched the following story to us. 

Like a dead body in a park full of joggers, there comes a point when a vacant building in a vibrant neighborhood can no longer just sit there rotting. But when that time finally arrives depends on a lot factors. During decades of decline, the Lower East Side was not the worst place to bury a body, or to leave a building dormant. But for the last 15 years, property values have been rising and today the local real estate market has never been pricier. Yet, there are still forces at play that would keep a building empty. What is at the heart of this very unsexy mystery? In a place where real estate is extremely valuable and scarce, what keeps a commercial building completely vacant for nearly two decades? What is the tipping point in which a vacant building can no longer stand? Is it when that building can literally no longer stand?

In the early ‘00s, the second story of 341 Grand St. (Ludlow Street) wore a gigantic grand opening–style red, white and blue flag — the kind you have to file a permit for with the Department of Buildings. It screamed “PRIME CORNER FOR RENT!” in an apparent attempt to seduce the boutique and bar owners across Delancey Street. Over the next decade, this unrented “prime corner” received various Buildings Department complaints, including:

“Piece of an abandoned building fell onto sidewalk”

“Windows hanging from frame”

“Caller states gutters are falling from the building”

341 Grand St., 1975. Photo by Edmund V. Gillon; Museum of the Cityo f New York.
A portion of the Grand Dairy Restaurant is visible on the right-hand side of this 1975 photo. Photo by Edmund V. Gillon; Museum of the City of New York.

The Grand Dairy Restaurant was once a bright neighborhood hot spot. It opened in the 1940s at 341 Grand St. and was popular for decades. Its candle burned out in the late 80s, as the Lower East Side’s Jewish immigrant culture faded away. A couple of short-lived businesses (a fruit market, a hair salon) have since leased the three-story, commercial building, opposite the Seward Park High School campus, but the property has mostly remained vacant.

These days,  it holds a small sign on one of the boarded-up windows that reads, “Building for lease,” followed by a Long Island-prefix telephone number. I have been wondering about this building for the last fifteen years that I’ve lived in the neighborhood. Why would this “PRIME CORNER” remain empty for so long?

Last month, my curiosity finally got the best of me and I called. At the other end of that Long Island phone number is a man named Burt who doesn’t want to give out information to just anyone. He wants to know who wants to know before he answers any questions at all. I said I was interested in opening a store. Monthly rent is $25,000 for the whole building, consisting of three commercial units. The first and second floor units are 1,600 square feet and the third floor is 1,000 square feet. Any and all work — maybe it could rent “as is” to a Thunderdome-themed OTB? — would be the responsibility of the tenant. Burt admits that the space is “very raw” and that the owners aren’t interested in selling the building. The lowest offer that they’d entertain is $10 million.

If I were going to spend $10 million on something — and for the record, I’m never going to spend $10 million on anything — I would do a little research first. So I checked that number with a real estate source. “Maybe,” my source says, “you’d find someone willing to pay $6,7, or even 8 million, but at $10 million, it doesn’t make sense. You’d be better off leaving your money in a savings account at 1% interest.”

What about air rights? “It’s a narrow lot.” The real estate agent shoots this one down. Developing the property into a few more stories of condos isn’t as attractive to investors as the owners might think. A small army of  brokers has been trying to get the family to sell this building for a long time, but they haven’t budged.

My source confirms that the “Burt” I spoke with on the phone—the one who wouldn’t tell me his last name—is Burt Kohn, one of the owners of the property. Burt has taken more initiative than the previous generation to get the building rented, however he has “very unreasonable expectations.”

“The [$25,000 a month] rent number isn’t so crazy,” the agent says, meaning generally speaking. But for this particular property, he explained, it’s totally crazy. For one thing, the building is across the street from a school, “so you’re never going to get a liquor license in there for a café or bar, some of the highest-paying retail tenants.” Maybe an office? My source confirms that the interior would need extensive structural work before any build out, easily to the tune of a million bucks. So, twenty-five G’s isn’t so nuts if the landlord made some improvements on his own or made some other concessions. The Kohn family isn’t interested in doing that.

I had to remind myself that the owners do not have an obligation— at least not a legal one — to upcycle the eyesore in our midst. Yes, they should act as proper stewards of the land, but even Lord Grantham has occasionally abdicated his moral duties to the plebes of Yorkshire. The Kohns also have a responsibility to be stewards of their own financial holdings.

When I spoke with Burt, I asked him why the owners weren’t interested in selling. He said, “Where are you going to put the money?” I didn’t really have an answer for that one. If you put it in a mattress, you’d get no sleep. Very lumpy. If the current year’s tax assessment and tax rate remain the same for twenty years, the Kohns tax bill would total $479,900. Spending a half a million bucks to recoup $6 million in twenty years doesn’t sound like a bad investment.

So why don’t they collect rent while the value appreciates? It’s a risk. “If you put a bad tenant in a space,” my source explains, “it costs a lot of money.” If a tenant stops paying rent, it could take a year-long legal battle to evict with no guarantee of seeing a dime. This risk is one thing that drives up rents, which in turn drives up vacancies. Another risk is a tax reassessment, which occurs any time improvements are made.  So the owners could get stuck with a bad tenant and a bigger tax bill.

The Kohns are in no hurry. The building is potentially worth a lot of money, and you don’t pay taxes on potential, at least not full potential.  Who knows? Maybe some lunatic will decide to give them $10 million. This is New York. Stranger things have happened. But for now, 341 Grand St. remains a cadaver we’ll just have to jog around.

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18 COMMENTS

  1. Vacant for years and an eye sore to the neighborhood. This is where the city should use eminent domain. And, if go to the next block over the hosiery store also is an eye sore and it’s amazing the fire dept. has not shut them down. Just look inside the building.

  2. I thought I read somewhere 5-10 years ago (possibly the old Grand Street News?) that the building had a very bad asbestos problem that required expensive remediation before anything can be done with it.

  3. they don’t need to use eminent domain and that would be an abuse of it. Maybe vacant retail spaces should be taxed at a higher rate. Regardless, eventually the owners will either get tired of paying property taxes with no income and will accept an offer to sell or will accept an offer to lease their building at a lower rate than they want.

  4. I called and asked how much it would cost to rent maybe 2 years ago and was quoted $10k / month. I guess I either caught Burt in a good mood, or he’s been paying attention to the current real estate sitch in the LES. Nice story, Ben!

  5. Have you been on Ludlow Street recently? It’s not exactly the Champs Elysee.

    And he has a corner building AND it’s vacant so his enduring unrented status indicates something about the intermittent posh retail on Ludlow Street. The reality of Ludlow retail – who is really doing business there, utilizing the quietness of the streets vs who has an empty bar/pharmacy is absolutely supported by the fact that this piece of real estate attracts would-be buyers but not quality retail interest.

  6. haha – yeah, maybe so they can really lose their building, right? If they can prove they haven’t turned anyone away and offered leases to people who strangely just never signed them as if all nonbuyer interest has been feigned then do you think they should get a DISCOUNT on their real estate taxes? it sounds like he is going through what Frank Rich was going through before he finally gave in and sold his real estate.

    He should give an interview in some smaller city in China like Xian – generate interest in a laowai’s life in New York and then utilize the immigrant Mainlander connection still in existence in places like Ludlow Street and put his lovely building to good use – he would probably find a trip to Xian inspiring. He can’t rely on posh retail news about Nolita or LES from places like boweryboogie and he can’t count on entrenched Chinatown retail ideas but I bet the local Chinese residents still have unfilled needs in the neighborhood.

  7. We don’t have asbestos not even in our basement and we know this because a sewer cleaner who also did asbestos insisted on tearing stuff up to look for asbestos so he could get another job and he even wrote a letter afterwards that we had no such problem.

    I think some people might make it unaffordable for him to investigate if he has it but I can recommend the guy who was in our basement if indeed there is an asbestos problem but that just might be an ugly rumor to excuse the united front to NOT rent his space from him.

    I wish I could help.

  8. It’s absolutely adorable just like my neighbor’s corner building. Too bad this isn’t like Hong Kong where a family friend rented the ground beneath shopping complexes like Times Square to developers and didn’t have to do anything beyond his capabilities.

  9. the state and city are using unexplainable real estate taxes and the tenant advocates and the inversion of victim and perpetrator when the latter is a tenant along with lovely operations like Chinatown Working Group to chip off old timer ownership of these pieces of real estate which I think is a mistake because it’s not self-sustaining at this lower level of real estate – there really aren’t enough Felicities/Taylor Swifts afterwards to support all this dislodged ownership. I mean if you don’t see frugal lesbians moving in – that’s how you know the place isn’t affordable, pleasurable (they all bought in Brooklyn while it was still cheap) because you can’t trick them with temporary twee retail.

    It’s always the central strip of the island that matters – the sides are just a hassle to get to even if they make West Village a thing or transform Tribeca, Meat Market, whatever. I really think NYC isn’t entertaining enough with enough genuine must-do things to hold tourists beyond a week nevermind get them to visit Flushing or sadly Little Italy/Chinatown these days – so why make it harder than it already is?

  10. He needs a Chinese contractor but he needs to have that lump sum available right away and then he needs an idea if he isn’t or can’t build higher. Ludlow is a sweet quiet street but it’s retail ….

  11. the city used eminent domain to take a building from a Canadian bank in Brooklyn claiming that they didn’t want the library tenant to unafford the bank landlord’s rent and what’s Canada gonna say to that, right?

    Canada already has too much trouble dealing with the drug and gun smuggling coming from NYC to upstate and across the Niagara border – coming on those Chinatown buses further alienating those clueless Chinese business owners who started the whole good idea of affordable and accessible interstate travel while the guns end up somehow in NYCHA buildings where you get over a 100 gang members arrested in one complex – there is such a huge running theme that is connecting all of this – drugs, guns, cigarettes, Atlanta, NYCHA residents having addresses down South as well. It’s very weird how blatant it is.

    And Albany can feign ignorance and just let the City have it. I have an idiot cousin who did the same thing when my other idiot cousins stole everyone else’s shares of real estate that the Commies returned to our family. He absolutely had all the power and he signed it over to screw over the other members of the family so he didn’t have to be confrontational with the toxic verbally abusive scammers while creating victims of the other family members. That is what Albany and the distant nonrich Republicans are being told by the NYC press coverage.

    And long before Menachem Stark’s family was devoured by cruel press coverage, nonChinese reporters picked up the ball of what the Chinese reporters did to my father’s reputation.

  12. hi JEng, there is a shortage of housing in the city right now. There are stores being priced out of their long-time location that can’t find space. If they really wanted a tenant, they would have signed an exclusive with competent and successful retail broker. They don’t want a market-rate tenant, they want a tenant that will sign a lease at 50% above market rate.

  13. I know there are vacancies in Queens but you have to take the bus. it’s not a housing shortage – its a shortage of orchestra seats for those on a peanut gallery budget.

    And I have seen spaces go unrented for nine months and legal cases where brokers came back after a lease renewal and demanded a second fee because their agreements require legal review before signing – its’ not simple for owners and there is no reason to accuse an owner of greed when they are not getting any income from the vacancy – its just blaming someone for having a hard time and we wouldn’t do it to anyone but landlords who are demonized in this city.

    I’m sure my community does not want to discuss how retail tenants soon to be protected by a rent control can also be culprits of stealing utilities and yes even residential tenants can be involved.

  14. New York City is outpacing projected population growth and population growth is outpacing housing supply growth by many times over. There are more people looking for apartments than there are apartments. If you have a vacancy it’s because it’s non properly being marketed or you’re charging too much or both. Furthermore, vacancies in Queens is irrelevant to high-demand areas in Manhattan.

  15. so shouldn’t high demand area Manhattan give preference as in a meritocracy to first responders and their families especially if they need to be on the UES for cancer care?

    you’re saying that orchestra seats are owed to everyone at cutrate prices – why?

  16. no. I never said “cut rate”. If you’re not getting tenants, you’re not asking “market rate” and/or your not advertising your property properly.

    Also, the Upper East Side East of 3rd Avenue is one of the most affordable neighborhoods in the city below 96th Street. It’s much cheaper there than it is in Williamsburg, for example. I do think shelter is a right, not no one–absolutely no one–is *owed* an apartment in New York City.

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