NY Dirt: Restaurants Gobble Up Space

11 minutes read

New York wasn’t always the restaurant town it is today.

In the decade between 2009 and 2019, jobs in the restaurant sector grew at twice the rate of the city’s total employment. Restaurants added 120,000 jobs, bringing the total to 317,800, according to a state comptroller’s analysis.

That growth is good for those of us who like to eat. But it also means that restaurant space, especially in Manhattan, is tight.

“Over the last few years demand has come back really strong for space,” said Graci Goldstein, a broker at TSCG who works mostly with restaurants. Not only are restaurant spaces now subject to bidding wars, landlords are also making deals before their current tenants have even announced they’re closing.

“You know a space is in hot demand when it never even hits the market,” Goldstein said.

Restaurants, unlike stationary stores and clothing boutiques, can’t rent just anywhere. They typically have specifications for venting and plumbing. That makes a good location difficult to find.

That means asking rents for restaurant spaces are high, Goldstein said, while overall mobility is low. Chefs with a stale brand on their hands may once have looked for new leases to open up something fresh. Today they typically stay in place, reopening with a new concept, menu and name.

To be sure, New York’s restaurant economy hasn’t fully recovered from the pandemic. Employment numbers kissed their 2019 peak in March of 2025 but were most recently 3.7 percent short. Those still-elevated asking rents, along with increased costs of labor, buildout construction and other expenses, mean that eking out a profit is harder than ever, and eateries are closing quicker than before, Goldstein said.

One possible avenue for chefs and investors looking to get out of the leasing game is to buy a property.

Take David Switzer, a partner in the now-Michelin-starred Italian restaurant Rezdôra. Switzer appears to have purchased the restaurant’s home at 27 East 20th Street for $7.25 million in 2018, according to city records. Switzer has also been making moves more recently. Last year he signed the deed for 86 University Place, where he put a six-month pastrami taco pop-up, according to Crain’s. In June he signed for 12 East 12th Street, where the restaurant Gotham was open for four decades.

Such an expensive avenue of course is not accessible to every restaurateur.

What we’re thinking about: I’m thinking about the community land trust model. Have thoughts? Share them with me at lilah.burke@therealdeal.com.

A thing we’ve learned: Why does Mayor Zohran Mamdani always wear a suit? He reportedly decided to adopt the uniform the night before his mayoral campaign launch on a whim, asking his team if they thought he should. Since then, he’s rarely taken it off — even to jump in a pool. Though Mamdani launched his campaign for state Assembly wearing a traditional South Asian kurta, some theorize he switched to a suit to convey professionalism and universalism amid criticism over his “unserious” socialist policies.

— Spencer Davis

Elsewhere…

— The City Council will hold a hearing Wednesday to discuss legislation to ban horse-drawn carriages in New York City, writes Gothamist. After years of attempts, the legislation has finally gained momentum following the June 17 death of Romanch Mahajan, an 18-year-old tourist who was killed in a horse carriage crash.

— Mayor Zohran Mamdani announced that the City Council will receive hundreds of New York City public school contracts “in the coming weeks,” amNY reports. City Council Speaker Julie Menin had set a Thursday deadline for the Department of Education to provide a timeframe for when it would send 579 contracts, which involve mandated school services and no-bid procurements.

— Spencer Davis

Closing time

Residential: The most expensive residential sale recorded Tuesday was $14.5 million for 110 East 78th Street. The Upper East Side townhouse is 4,500 square feet. The property last sold off-market in 2022 for $17 million.

Commercial: The most expensive commercial transaction was $100 million for 675 Hudson Street. The former industrial building located in the Meatpacking District is known as the Herring Building. Aurora Capital Associates and David Ellis Real Estate partnered in 2023 with renovation plans for the 50,000-square-foot building. The property has been sold to Birley Propco LLC.

New to the Market: The highest price for a residential property hitting the market was $9 million for 570 Broome Street, Unit PHA. The Hudson Square condo is 2,000 square feet and last sold in 2019 for $5.8 million. Compass’ Ryan Dichter, Karen Doan and Kathryn Rotella have the listing.

— Joseph Jungermann