Thursday, March 12, 2009

The Last Person...

The last person I'd want to be today is a mall operator - strip or otherwise.

Commercial tenants of almost all stripes are getting killed. And just about every one of them is going to ask-for/demand a rent decrease. For example:
Movie-rental chain Blockbuster Inc. sent letters to its landlords around the country in January saying that company real-estate representatives would be in touch. "It is imperative that you respond to their call expeditiously and favorably," the letter reads. The topic: Blockbuster, struggling under a mountain of debt, wants rent reductions of as much as 30% and early lease terminations at thousands of its outlets.

Some landlords don't seem to be biting. Weingarten Realty Investors Inc., based in Houston, has 50 Blockbusters spread among its 323 U.S. shopping centers. "There's no way we're going to do that on any significant basis," ...

No way, huh?

We shall see.

Mall owners are screwed no matter what they do. Don't give rent reductions....and they'll accelerate the demise of lessees.

Grant them, and they'll just open the door for other tenants to plead for similar reductions.

The mall operators essentially have ZERO LEVERAGE in this game. Who'd fill an empty storefront today? Maybe a pawnshop but that's about it.

Furthermore, as stores go empty, it lowers *foot traffic* - which hurts the rest of the tenants.

Recently I talked to a *fast-casual restaurant owner* in a local mall. He told me he was now hemorrhaging money, "every month". I told him to take his financials to the mall operator and ask for a rent reduction. Amazingly, the thought never even crossed his mind.

Empty strip malls are everywhere these days - even up north.

Just how many walk-in businesses do we really need anyway?

Mall operator - an unenviable job, but with *choice* parking.


Anonymous said...

So 1 out of every 5 dollars that Mass gets from the federal stimulus package will go to celebrate the legacy of the Kennedy clan...Great stuff. $5.8 million to the Ted Kennedy center...I propose that in the main lobby they have Kennedy's 1967 Oldsmobile Delmont 88 that fills up with seawater. Once it gets to a certain amount, all 4 doors pop open and the water pours out into a fountain and then repeats.

I am so glad that MY federal tax dollars are going to celebrate this MURDERER...Thanks again Mass!

CaptiousNut said...

Did y'all in NH vote for Obama?

Anonymous said...

Thanks to Masshole imports, yes the idiots in NH voted for this moron. The idiots who are fleeing big government policies and taxes are heading north and then can't understand how NH can survive with only a property tax. We are heading to either an income tax or a sales tax within 5 yrs.

I on the other hand stuck with my principles and wrote in Dr. Paul.

Anonymous said...

I shake my head in wonderment when I see new commercial office/retail projects under construction.
Clearly one has to be able to endure disagreeable operating results for long periods in this biz.
It prompts the question: does ANYONE make money at this? The ongoing existence of these entities suggests yes but every time I look at their financials they are in the soup!

Anonymous said...

Someday I will be my own commercial tenant. Then do I have leverage on myself? How do I leverage my 80 year old grandmother? Tell her I will stop contributing to social security?

Slow out.

CaptiousNut said...

Stop finding her glasses when she loses them.