That’s my main “small business chud” talking point, ridiculous rents that drive up the base cost for absolutely everything and drive small businesses out.

A co-workers wife has had a used bookstore for a few years, had low rent negotiated with this cool old Chinese man. He passed away, the property was sold, and their rent is jumping so much she’ll have to close.

I foresaw this happening to them when they confided in me how precarious their business was and even then how much of what they made went towards rent despite them paying half “market value.” She doesn’t even pay herself a Salary, they just barely break even. When I asked them about it at the time it was just some nebulous future problem for them.

[–] 7bicycles@hexbear.net 28 points 1 day ago (1 children)

I've tried to tell people that the demand and supply for these sort of buildings exists basically entirely uncoupled from the local conditions which are basically entirely a non-factor since more and more they're all just in some portfolio of commercial infrastructure fond where expected rent earnings over the next 40 years justify never lowering the rent because then all those earning projections just blow up. What's 2 years of no rent against 38 years of getting only half? But I'm usually assured that this multi decade spanning issue will surely see a market correction and dump all the rent prices, give it a year or two - tops.

[–] WoodScientist@hexbear.net 6 points 1 day ago

One thing to keep in mind is that often when you see vacant storefronts, what is actually happening is that the owner of the building is redeveloping it. Businesses have multi-year leases. If you want to redevelop a commercial building, you have to either pay a fortune to buy everyone out of their leases or slowly wait a few years for the building to empty out.

You might ask why they don't offer month-to-month leases in the meantime, but there's little demand for that. If a bank is lending you money to start a restaurant, they want to see a long-term lease agreement. They're not going to lend you hundreds of thousands of dollars to purchase and install a restaurant's worth of equipment in a place with a month-to-month lease. There are very few businesses that would be interested in such short-term leases. And the few that are willing aren't worth the effort for the pennies that you could get out of them. The only real rental customers for buildings that are slowly being emptied are seasonal retailers like Halloween stores.