Challenges and Opportunities in New York and Beyond

Mega-clubs may not be the only endangered Manhattan nightlife species in 2008. The New York State Liquor Authority (NYSLA), local community boards and overzealous hospitality industry legislators actively have been attacking the nightlife industry as a whole.
    This includes nightclubs, bars, lounges and restaurants. As nightlife industry leaders gather this month in Atlantic City at “The Show” to weigh directions their business is likely to turn in the coming year, we looked to identify east coast trends that are giving nightclub and bar owners specific opportunities and ideas that might work to their advantage. Of equal importance, we identified causes for concern.

Rules of Thumb and Challenges
    Looking to open a new nightclub, bar or lounge? A sure fire rule of thumb is location, location, location.
    Establishing a business away from residential neighborhoods can be an important factor as long as the venue is worth a destination fare. Some operators have chosen to be in new nightlife districts within close walking proximity to similar establishments. Districts in demand include West Chelsea, the Meatpacking District and now NoLita, a Little Italy enclave. Of course, lower rents are a key factor in choosing an offbeat location as rents continue to climb.
    Opening a club or restaurant, say in an isolated warehouse district, can prove a boon initially or, in time, a double-edged sword. As new clubs and restaurants flourish, families take note of resulting improvements and look around for still inexpensive living quarters. Residents quickly develop a sense of ownership towards their new neighborhood. Ironically, they are apt to call their elected representatives to file noise complaints targeting pre-existing nightclubs that were responsible for cleaning up the neighborhood in the first place.
    Citations are issued for “violations” for a number of reasons. Some of them are self-serving on behalf of police and government agencies. The cacophony of crowd noise complaints to city officials regarding the comings and goings of patrons at established neighborhood venues adds to owner problems. Community board follow-up is a given, with police inspections and more citations a common occurrence.
    Over the past decade, stepped-up enforcement of code violations — part of the Administrative Code (Nuisance Abatement Action), that is — legal action by the police department, government legislation and increasing negativity toward New York City nightlife at the behest of past and present mayors have added to industry challenges in trying to stay on an even keel.
    Combine these obstacles with aggressive legislative efforts initiated by the Department of Consumer Affairs, community boards and local politicians.
 
Big Brother
    Look for it in your neck of the woods: “Dance Police,” arriving unannounced, to check out the proprietor’s dance (cabaret) license and write citations whenever possible. Authorities checking the dance floor for underage individuals add another off-key note to one’s evening out. 
    The New York City Council has passed measures requiring security cameras at nightclub doors — cameras/scanners, inside and outside, adding another tedious edge to nightlife management. How could such scenes not contribute to a climate of intimidation, the opposite of the pleasant expectations of a wonderful night on the town, which used to be the city’s hallmark of social excellence?
    The City Council recently called upon the legislature and SLA to regulate bottle service. If these trends continue, they will accelerate a move by nightlife venues out of the city. Manhattan will lose its cache as the city that never sleeps.
 
Is Your State Safe?
    While there are absolute changes going on throughout the nation, a recent news report stated that this year several state legislatures have debated measures to extend the hours of bars and package stores. Legislators are considering these measures as a way to make their respective states more convenient to consumers and to bolster their hospitality and tourism markets.
    Counsel for the New York Nightlife Association gives us the current bottom line in New York City: “Though community boards cannot deny liquor licenses, they can be a formidable force for bar owners,” says Robert Bookman, partner in the law firm of Pesetsky & Bookman that serves as counsel to the New York Nightlife Association. “Sometimes we meet with the board to change things like, say, hours of club operation, to accommodate them.”
    Bookman believes the license approval process is way too politicized. “It has made approval authorization become a popularity contest and has contributed to a negative climate for New York City as a good place to do business,” he says. “There are 52 community boards (all staffed by volunteers) in New York City. It’s not a level playing field anymore for getting a new liquor license. New cabaret (dance) applications must only apply to areas where they are properly zoned. Everything is now being skewed to make way for residential buildings in what was previously zoned for manufacturing.”
    Community awareness is an issue in every major city. We encourage industry-supporting institutions, such as the New York Real Estate Board, the New York Nightlife Association and the New York Restaurant Association — or the comparable organizations in other cities — to meet to find ways for on-premise operators to co-exist with the powers that be. Never before has the notion existed that industry associations were competitors with state officials for the public trust instead of allies in building a better New York.
    Despite inbred pockets of negativity, New York is a magical composite of attractions that sets the standard as the most dynamic city on the planet. When we all band together to manage what needs correcting, it will maintain its ranking as a favored destination for tourists and a place beyond comparison for the millions of people who live, work and play here.
    It is time for harmony among all competing interests. Let’s not lose sight of the fact that there is simply no match to the vigor, variety and volume of nightlife businesses here for all serious players, as well as the record-setting revenue they generate that helps enrich city life              NCB




Alex Picken is president of Picken Real Estate Inc., specializing in nightlife real estate. For more information, visit www.pickenrealestate.com.