Everyone from Anna Sui to Marc Jacobs to Donna Karan buys from Gallagher. In fact, you could argue that his stacks provide the "inspiration" (otherwise known as shameless theft) for so many of the retro looks prancing down runways every season.

Now, NYU is putting up a 26-story dorm next to Gallagher's store. Construction has closed the sidewalk on his side of the street, which Gallagher claims greatly impedes access to a door in the pavement that leads down a metal staircase to his lair, an underground warren of low-ceiling, militantly unrenovated rooms in the basement of a residential building. Gallagher believes finicky fashionistas—Europeans who arrive by limousine; swells afraid they'll get their Hedi Slimane pants cuffs dusty on the sooty street—won't darken his door until the concrete stops pouring, which he estimates will take at least another year. (In truth, it's a little hard to imagine these prissy types clamoring down the rickety stairs even when there's no construction to contend with.)

In the meantime, Gallagher says he's in the red for more than $100,000—the amount he estimates he'll lose from the lack of walk-in traffic, and he wants NYU to foot the bill. "They're starving my children!" Gallagher, who is nothing if not voluble, cries out. (He has four-year-old twins.) "How many people have come in the store since you've been here? None! I used to have 50 people in here. They'd be lined up outside. NYU is putting me out of business! There's no Village anymore."

For its part, Hudson, the company doing the actual construction, is "working with Mr. Gallagher to resolve his issues," says an NYU spokesperson. On May 30, Hudson wrote Gallagher offering to have signs made and placed on both corners with Gallagher's logo, informing pedestrians that the shop remains open. On advice of counsel, Gallagher says it's an offer he plans to refuse. "It's just a joke," he insists. "They should be responsible for my loss of income."

Gallagher is no stranger to the upward thrust of New York rents and the rapidly shifting character of erstwhile bohemian neighborhoods. He used to have a vast, very impressive space in the meatpacking district, but in 2001 he gave it up. "The rent went from $8,000 to $24,000, so we left." He also operated a small gallery on Fourth Avenue and 12th Street, but that closed last April, another victim of construction but with no connection to NYU. ("In that case, they were nice," Gallagher says. Pressed, he will only add enigmatically, "They made it up to us.")

Now he is down to one shop, his original headquarters, though an hour or two in this grotto hardly gives an accurate indication of the extent of his business. A visit to his website (vintagemagazines.com) is more revealing: Gallagher estimates that he has a million periodicals at his disposal. With the Internet, these treasures are available to anyone from Bhutan to Bora Bora who has a mouse, a credit card, and the fierce desire to own a 1955 Cosmopolitan or a copy of Town & Country from 1905.

When I ask him if in fact he isn't still making a ton of dough (the phone rings off the hook during our interview) he shakes his head—shaved for the summer—and insists that people want to come to a real bookstore. "They want the smell of the place."

And it does have a nice, comfortable, decomposing-paper aroma. In fact, the whole place, with its dilapidated furniture, low ceilings, and column after column of old magazines, is suffused with a certain lost New York ambiance: A copy of the August 15, 1961 issue of Vogue, when the magazine was published twice a month, lies a few feet away from the May-June 1970 edition of The Realist—a rare non-fashion periodical here, with the macabre headline "National Guard 4, Kent State 0."

It's hard not to feel nostalgic along with Gallagher as he longs so eloquently for the halcyon days of 19 years ago when he opened this shop. He first leased the space to house his personal archive of periodicals, but when the renowned fashion photographer Steven Meisel stopped by and purchased $19,000 worth of material in a single afternoon, Gallagher says he decided to go into business. "Back then this was a crack house," he remembers fondly.

Gallagher argues that NYU is choking to death one of the last independent bookstores in Manhattan, and, whatever the facts in the matter, who among us doesn't mourn the death of the independent bookshop: the sort of places that used to line Fourth Avenue, the kind of spot where Audrey Hepburn worked in the first reels of Funny Face, the holes-in-the-wall where Kerouac and Ginsberg shoplifted Baudelaire? (This powerful fantasy, however, does not prevent us from going to the Internet when we need an out-of-print book in a hurry.)

Clearly, NYU isn't solely responsible for the changes in the neighborhood, though they deserve plenty of blame for knocking down historic buildings and putting up depressing high-rises. (My own personal contempt for them hit a high point when they demolished the Edgar Allan Poe house on West Third Street.) And it's not news that gentrification has taken a hideous toll on the landscape of the Village. Among innumerable horrors, three sad examples: the Equinox gym on Greenwich Avenue where the movie theater stood for years; the stars set in the pavement outside what was once the Second Avenue Deli, each of which contains the name of an actor from the golden age of the Yiddish stage, now decorating the sidewalk in front of a Chase bank; Ralph Lauren and other international labels colonizing Bleecker Street, where one of the last bits of dubious charm is provided by the faux-rural décor of the ridiculously popular Magnolia Bake Shop, with its long line of customers waiting for cupcakes.

But even if NYU doesn't fork over one penny, there will still be a basement where you can buy a 1974 Seventeen mag or an early New Yorker—Gallagher concedes he isn't going anywhere anytime soon. "I'm sticking it out either way," he says. In the meantime, he's keeping alive a tradition he started long ago: For years, Gallagher has been giving makeovers to local homeless men, two a day. "Mr. John up the street cuts their hair and they get new clothes from the Salvation Army." In fact, a recent recipient, who is at the shop when I arrive, looks so natty I mistake him for an employee. "Why do I do it?" Gallagher asks rhetorically, flicking a cigarette and looking around his empty shop. "I've always done it. It's the Village."