4 ms·

Usually the pattern is allow a local small business lease to expire and wait for a big company that will pay at the highest end of the market or above market re

Usually the pattern is allow a local small business lease to expire and wait for a big company that will pay at the highest end of the market or above market rents. So kick out local business with thin margins who wants to negotiate the rent and wait for Starbucks or Chipotle to pay you $$$. No clue if it is actually financially beneficial for the renter but many believe it's beneficial to keep a store empty to wait around for a big company to want the property rather than committing to a small entity who can't pay big company rates. Tenants also make the building more difficult to sell, if you are trying to sell.

mynegation 7y ago
I do not know much about commercial real estate but why would big chains pay top dollar? McDonalds is famous for seeking bargains on real estate and here in dowtown Toronto Starbucks did not flinch to axe several underperforming locations.
- ritchiea 7y ago
  Gentrifying neighborhoods tend to have more of this behavior from renters because the big corps are new to the neighborhood and expect to have a long future presence there as neighborhood property values and incomes only increase. Whereas an existing competitive market like downtown Toronto with lots of big corporate chains should have renters with less optimism their space will be particularly desirable. Another somewhat related problem that I know happens in NYC is a building is owned by a parent who dies and leaves the property into split ownership amongst the children. Then the children cannot agree on a strategy to rent the building. And the fight results in an empty property.
  - ghaff 7y ago
    I was talking to a friend last night about just such a thing. It was a rural rather than urban property but same idea. Two siblings inherited a property and couldn't agree on what to do with it going forward--and I gather maybe didn't get along under the best of circumstances--and ended up selling it at a cheap price just to be done with it.

mynegation 7y ago

I do not know much about commercial real estate but why would big chains pay top dollar? McDonalds is famous for seeking bargains on real estate and here in dowtown Toronto Starbucks did not flinch to axe several underperforming locations.

ritchiea 7y ago
Gentrifying neighborhoods tend to have more of this behavior from renters because the big corps are new to the neighborhood and expect to have a long future presence there as neighborhood property values and incomes only increase. Whereas an existing competitive market like downtown Toronto with lots of big corporate chains should have renters with less optimism their space will be particularly desirable. Another somewhat related problem that I know happens in NYC is a building is owned by a parent who dies and leaves the property into split ownership amongst the children. Then the children cannot agree on a strategy to rent the building. And the fight results in an empty property.
- ghaff 7y ago
  I was talking to a friend last night about just such a thing. It was a rural rather than urban property but same idea. Two siblings inherited a property and couldn't agree on what to do with it going forward--and I gather maybe didn't get along under the best of circumstances--and ended up selling it at a cheap price just to be done with it.