3 ms·

Managing tenants can be more trouble than it's worth. The people buying up these properties likely prefer security and liquidity more than maximizing their ret

Managing tenants can be more trouble than it's worth. The people buying up these properties likely prefer security and liquidity more than maximizing their return. Tenants make the building more difficult to sell because they often come with very long leases. There's also a strategy of waiting for rent prices to appreciate enough before leasing to corporate clients. You could get 10y $1000/mo from a small time coffee shop, or you can wait 5 years and maybe get Starbucks locked into a 10y, $5000/mo lease after the area grows up a bit.

jaypeg25 7y ago
Seeing this exact story happen all over DC right now. Just yesterday a locally owned bar announced it was closing because it couldn't come to terms on a new lease with the property owner. The insinuation was that the owner would happily let the place sit empty until a national chain was willing to take it. Similarly, 14th St in DC even just a few years ago was becoming a vibrant, fun spot to shop, drink, and eat in. This was after years of neglect in the area. Over the last year or so though a string of bars and shops have closed and all been replaced with banks. Capital One Cafes, Citi, etc. I have no idea how all these banks are functioning (I thought brick and mortar banks were on their way out?) but it's a damn shame.
- ghaff 7y ago
  It's always a matter of some surprise to me just how much prime retail real estate banks fill up. As you say, it's not so much for the tellers any longer. But I guess it's to project an image for people getting loans or doing other types of more complex financial transactions. In general, they're likely profitable enough that even though the branches are inefficient in some sense, the fact that people will be more inclined to use financial institutions with local branches they can go into in person probably makes it a worthwhile tradeoff.

jaypeg25 7y ago

Seeing this exact story happen all over DC right now. Just yesterday a locally owned bar announced it was closing because it couldn't come to terms on a new lease with the property owner. The insinuation was that the owner would happily let the place sit empty until a national chain was willing to take it. Similarly, 14th St in DC even just a few years ago was becoming a vibrant, fun spot to shop, drink, and eat in. This was after years of neglect in the area. Over the last year or so though a string of bars and shops have closed and all been replaced with banks. Capital One Cafes, Citi, etc. I have no idea how all these banks are functioning (I thought brick and mortar banks were on their way out?) but it's a damn shame.

ghaff 7y ago
It's always a matter of some surprise to me just how much prime retail real estate banks fill up. As you say, it's not so much for the tellers any longer. But I guess it's to project an image for people getting loans or doing other types of more complex financial transactions. In general, they're likely profitable enough that even though the branches are inefficient in some sense, the fact that people will be more inclined to use financial institutions with local branches they can go into in person probably makes it a worthwhile tradeoff.