DOWNTOWN — The Broadway Deli, a fixture on the Third Street Promenade for 20 years, has been unable to negotiate a new lease agreement with its landlord, Promenade Gateway LLP, and could be headed for closure.
Marc Zeidler, the restaurant’s general manager, said in talks late last year Gateway insisted on a drastic rent increase — from about $55,000 per month to $100,000 per month — and wouldn’t budge.
While there’s no closure date and Zeidler said he’s hopeful an agreement can still be reached, it appears Gateway has different plans.
The property owner is taking steps to divide the deli’s space into two storefronts — one for a restaurant and one for a retail tenant, and has hired land use consultant Howard Robinson to help with its plans.
The final decision about the deli’s fate, though, will likely be made at City Hall.
Because Gateway’s proposed changes require a conditional use permit (CUP), the Planning Commission will have to sign off on the company’s plans before the renovation could start.
Gateway is presenting its proposal to renovate the space at a Bayside District Corp. board meeting on Thursday and plans to appear before the Planning Commission in April. Bayside is the public/private organization that manages Downtown for City Hall.
Meanwhile, the Broadway Deli’s lease expires at the end of May. Zeidler said the restaurant has been given a 90-day extension and will pay rent on a month-to-month basis after that, putting the business and its 65 employees in limbo.
“The Broadway Deli is an institution,” said Kathleen Rawson, Bayside’s CEO. “So it’s sad to hear they’ve chosen not to renew their lease.”
A call to Gateway was not immediately returned Tuesday. But in an interview, Robinson confirmed his client has no plans to continue leasing its space at Third Street and Broadway to the Broadway Deli, which he said occupies more than 8,000 square feet.
“Broadway Deli is not renewing their lease, so the landlord is looking to bring in a new restaurant tenant and a new retail tenant,” he said.
Robinson said the CUP is required because his client wants to divide the space so that the part of the property facing Broadway Avenue would be for retail and the part facing Third Street would be for a restaurant. Robinson said City Hall has a rule intended to promote a “pedestrian oriented feel” Downtown that designates the part of the property along Broadway for restaurant use only.
He said his client’s request that an exception be made “is consistent with the intent of the code” because locating the restaurant on the Third Street side of the property would allow for more outdoor seating and would generally enliven the outdoor area more than placing a restaurant along Broadway, where scarce sidewalk space and heavy bus traffic make outdoor dining difficult.
While Zeidler said there’s still a possibility the Broadway Deli could occupy the scaled-down restaurant space, Robinson said he believes the deli will be closing “within the next several months.”
Robinson said the Planning Commission hearing on the CUP is tentatively scheduled for April 21. The commission’s chairman, Hank Koning, on Tuesday said he was unaware of the proposal.
Zeidler said he believes the fate of his business rests with decision makers at City Hall.
“I think he’d like to dice the space up,” he said of his landlord. “It all depends whether or not he gets his approvals.”