Katz's Cut a $17M Deal With Luxury Developers To Stay In LES

Katz's Deli guaranteed its stay on East Houston Street partly by cutting a deal with developers to sell its air rights and neighboring lots for $17 million, according to a report from the Times. The nearly 130-year-old family-owned deli sold air rights and two properties by the iconic 205 East Houston St. location so that developers could erect an 11-story condo building next door. "So many people in the city have a story and a connection to this place," Katz's owner Jake Dells tells the Times. "To me personally, preserving it was the most important thing."

It was part of a $75 million deal that spared Katz's but ultimately shuttered several other small businesses with less historic sway, including 24-hour Turkish restaurant Berekt and Ray's Pizza. Despite the deal, developer Ben Shaoul says they always intended to leave Katz's alone. The small businesses that closed were "part of evolution," Shaoul says — "You call it gentrification, I call it 'cleaning it up,'" he says — but they were "adamant" about making sure Katz's stayed. (Shaoul is apparently a fan of pastrami.)

Many longtime LES residents aren't happy about the situation even though the deli won't be falling victim to development. The loss of the other small businesses matters, and the influx of such pricey condos and retail may mean Katz's old-school charm will be existing in a vacuum, they tell the Times. The cheapest studio for sale at 196 Orchard St. is a 515-square-foot studio for $1.075 million studio, and the same people who frequented Ray's Pizza likely won't be able to afford memberships at the Equinox gym going up in its place. "It's really a loss for the community when the mom-and-pop businesses disappear," says the president of a LES preservation organization, "which they really are at a frightening pace."

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