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Joseph Cohen, owner and operator of the popular chain of Bazaar stores, spends most of his time at the Third Avenue Bazaar at East 67th Street.
Next door, a Woolworth's is moving out.
"I'm not all that curious about what the Woolworth space's new rent will be, because it will probably depress me," says Mr. Cohen, a burly but gentle man in his mid-fifties whose family has been in retailing in New York since World War II.
He assumes the rent will jump to $70 a square foot from $10 and knows that increases like that spell trouble for his own nine-store chain. "I'm going to phase out stores as leases expire. I can't see paying anything over $30 a square foot because I can't mark up my prices that much," he says.
Mr. Cohen may sound like just another tired, outdated retailer forced out of business because he can't compensate for rising costs. But he's not. On the leading edge of specialty retailing, he sells household goods to acquisitive young apartment dwellers from his attractive, well-merchandised Bazaar stores. But at the level New York rents are headed, soon even he won't be able to survive.
Escalating rents have plagued Manhattan store owners since the city's economy bounced back in the mid-1970s. But now rents have spiraled so high and show so little sign of declining, they promise to dramatically reshape New York retailing. Soon only a few types of stores -- mainly high-priced women's showcase boutiques, groceries and fast-food outlets run by hard-working ethnic merchants -- will be able to survive on Manhattan's most popular shopping thoroughfares.
The ripple effect of escalating prices on these streets will eventually make even the so-called "escape avenues" too expensive for neighborhood stores selling basic merchandise. That will prompt some sad disappearances.
As leases come due, traditional New York retailers -- the small purveyor of men's brand-name clothes, the gift dealers, and the innovative furniture and housewares stores that require large spaces -- will find it harder and harder to stay around.
"Eventually, in many areas, you'll see no barbers or mom-and-pop stores on the ground floor," says Jonathan D. Gould, president of Gould Equities Corp.
There's no relief in sight for these stores. Retail rents, which...