The current economic slowdown in New York reminds one of the American saying, “One man’s loss is another man’s gain.” But with so much activity from so many diverse businesses, it is very difficult to fully determine cause and effect. We suffer from the devaluation of the dollar while businesses that serve international tourists are booming. Who jam packs New York restaurants? Residents of European capitals who are used to late suppers and keep their valuable euros at home or our unemployed financiers drinking away their problems? It is hard to say, but to get a table at a good restaurant in Manhattan is tricky, even on a Monday!
Almost every day, our press blares about the healthcare crisis. Meanwhile, the victims of this crisis – doctors and medical offices – have no one to treat. There is a rumor that doctors pay patients for their visits, a refrain that echoes through the houses of all elderly immigrants so persistently that it appears completely reasonable. Who is at fault here? Recession? Advances in medicine? Or the simple fact that not long ago in some “Russian” neighborhoods, one out of every four corners of an intersection had a medical office? On a bad intersection, there were two clinics. The remaining corners were occupied by a pharmacy and the offices of suppliers of medical equipment to the general public. It seems that the sickest have left us for good, and the survivors have recovered. It is time for the doctors to retire.
My good friend Sasha Shoikhet works in a business that never sees a drop in the demand for its services. He is a co-owner of the Latvia grocery, on Avenue U and 13th Street, in Brooklyn.
“Everything is becoming significantly more expensive,” he says. “Two years ago, plain white bread cost 99 cents, now it is $1.99. Last year, a bottle of vegetable oil cost $2.99. Now it costs $5.99. Your favorite cheese, Manchego, cost $7.99 a pound and now it costs $11.99. It’s clear that people have begun to cut back a little bit.”
Sasha gives two main reasons for the increase in food prices: first, a weak dollar, which quickly shows up in the cost of many products, including the Russian products, without which his store would lose its allure for Russian customers; second, the increase in gas prices. “If a driver who delivers milk, bread, sausage, etc. to stores has to pay more for gas, he will naturally pass on the additional expense to the people he supplies. In turn, these people will add the extra expense into the cost of the product,” said Sasha. “No one works to lose money!”
Things are such that an increase in the price of one product or service causes a chain reaction that leads to a general increase in the prices of goods and services. In this way, a new balance between revenues and expenses is reached. However, beyond price fluctuations, each business can be influenced by its own specific factors.
“When we opened our store, this was a Russian neighborhood,” Sasha said. “We had four clerks working behind the counter and still there was a line. I would come home and fall off my feet from exhaustion. Now the young Russians have moved away, and all that remain are the elderly. With their incomes, they are forced to pinch “kopecks.” And the Chinese, the majority of the residents now, are not our clientele.”
Irina Krentsel confirms that her business is absolutely stable during a fluctuating economy. In her native Lvov, she was a dog breeder. She had barely arrived in Brooklyn when she began working at the White Poodle Salon where she began her American career as a dog washer. Then, the salon's owner taught her how to cut a dog’s hair. To this day, Irina is grateful.
Last year, when Irina had around 200 clients, she decided to open her own salon and store. Living in Brighton Beach, initially she wanted to find a location closer to home, but the prices were unsettling. “A location smaller than 500 square feet cost $2,000 or more," she says. “The small size would make it completely impossible to fit furniture and cages and also reserve some space for washing and cutting." Irina found a suitable location at 157 King's Highway, not far from Stillwell Avenue. Her whole family renovated it. When their money ran out, she turned to New York Association for New Americans (NYANA), which helps with small businesses loans, and received a life-saving $10,000 loan. A month ago, Irina Krentsel started to receive visitors at her new office.
Only one puppy snoozes in a cage, a tiny Yorkshire terrier that Irina calls Kuzey. As I understand it, to her, all of the puppies are Kuzey. Their new owners will name the dogs. “I’ve sold all of them and soon they’ll be coming for this one as well," she said. Yorkies are currently one of the most popular breeds among Russians. A puppy costs $1,500, and demand for them isn’t falling.
But most of Irina's money comes from caring for dogs. “A good owner brings their dog for a cut at least twice a month," she says. “If you skip a haircut and wash, then bringing the dog back up to shape will be torture for both me and the dog. Good owners understand this.” Irina says that in just one month at her new location, she has at least 50 new clients, mainly Italians, and she is thinking about hiring an assistant.
In America, when people are faced with complicated life decisions, they are frequently advised to “follow their heart." Irina's experience allows us to say that this advice is suitable for making business decisions as well.
The owners of a print shop in Sheepshead Bay promise to be completely open with me provided that I promise, in turn, not to give their names and address. “We’ve been in business for 15 years,” they told me. “This year has been the most difficult. We’ve lost approximately 20 percent of our income. This is connected with the fact that many of our clients, first and foremost Russian medical offices and small stores such as souvenir stores, have gone out of business. There are many reasons. First, there was a clear surplus of medical offices in Brooklyn; it seemed like there were more doctors than patients and they couldn’t handle the strain. Small stores were tailored to Italian tradition, but there are almost no Italians left here."
Aelxander Sas, the owner of APS printing at 1558 MacDonald Avenue, says that diversifying his business was the antidote for the recession. He used to do only printing in Brooklyn, but in January he moved to a larger location (4,000 square feet) and opened a cardboard packaging factory at the same time.
“I give a break to those who complain about hard times,” Sas says. “If a client doesn’t have enough money for 10 posters, I can make him one. Not everyone takes such orders. In addition, I do various types of printing, like, for example, I print on t-shirts. If there are no orders for one type of printing, there are some for another type. On the whole, my business is growing. As for the recession, the business world is structured in such a way that today it’s a little better, tomorrow, a little worse. But you should set up your operation so that there is always a client base and that this client base is always growing. We’ve achieved this.”
Pavel Kaptsan, an employee of Prudential Insurance with an office on 333 Avenue X in Brooklyn, says that his business is flourishing. “People are not exempted from insuring their cars because gas prices have increased and they drive less and buy more economical cars. The same can be said about real estate owners. They buy a house and are obligated to insure it while they repay the loan.”
But the steady stream of clients for car and house insurance is not the reason his business is flourishing. Pavel talks about a new product that is popular – insurance covering qualified care for the elderly who, because of their material status, do not qualify for Medicaid and its unlimited benefits. Most people retire with some savings and a paid-up house that costs about a half million dollars. As a rule, people try to pass this on to their children. However, if an old person becomes very sick and requires constant care, all of his savings and real estate goes to pay for these services. Medicare covers care by a nurse or nurse’s aid for a very limited period of time. After this, the person has very few alternatives: either pay out-of-pocket for these services or burden their children with caring for them. Meanwhile, with the constantly increasing cost of health services, a half million or million dollars disappears with frightening speed. Insurance companies are now offering policies that can cover these costs. Pavel’s company is trying to establish itself in the market for this promising product. It plans to open dozens of new offices around New York.
For now, the national housing crisis has passed over popular New York neighborhoods, including Brighton Beach. Leon Bogorad, who has worked at Elbe Real Estate for 30 years, says that according to statistics from the Multiple Listing Service, prices for Brooklyn coops rose almost 3 percent in the past year, and the demand for coops has not fallen.
“When the seller sets a realistic price, the apartment sells rather quickly,” Leon says. “If the owner of a two-bedroom 1,000 square feet cooperative apartment in Brighton Terrace asks $650,000, it won’t sell, but at $450,000, it will.” Leon gives one more example: his client put a two-bedroom apartment in an old cooperative building in Brightwater Court on the market for $280,000. The reaction from potential buyers forced him to raise the price, and he recently rejected a $340,000 offer.
Rents have also not fallen. A one-bedroom apartment, independent of size and condition, costs $1,000 per month and higher. A two-bedroom rental in the popular “Ocean” starts at $2,500 per month.
The situation is somewhat paradoxic,” Leon says. “People hear about a crisis, about how apartment buyers cannot repay their mortgage, and they think they should wait until prices fall. But prices are not falling.”
To my question about how new condos are selling, the Brooklyn broker and realtor Semen Belfand answered: “According to statistics from Reallist.com, the number of sales has fallen, but prices continue to rise. For example, last March, 180 homes were sold in Brooklyn, and this March, only 136 were sold. However, the average home price jumped from $520,000 to $586,000 in one year. According to the March data, the number of condo sales also dropped. Last March, 841 condos were sold, and this March, 570 were sold, but the average selling price for apartments jumped from $350,000 to $424,340 in the past year."
I am far from convinced that my survey reflects the situation as a whole. I spent only one day moving from one businessman to another with whom I am acquainted. Like me, some of them arrived in the United States two decades ago. Some recent arrivals got loans to open their business from NYANA, an organization that provides a new type of help to “newly-minted” New Yorkers. Everywhere I saw one and the same attitude towards life – optimism and understanding that life without difficulties exists only in fairy tales.
