4 ms·

It seems like a pretty reasonable offer — if you understand how rental markets work. Landlords take on the substantial risk of long-term ownership, maintenance

It seems like a pretty reasonable offer — if you understand how rental markets work. Landlords take on the substantial risk of long-term ownership, maintenance, and uncertain market demand for their product. Operating costs —- that’s excluding financing costs — typically run 45% of rents. Tenants usually, but not always, pay a higher rental rate than the equivalent ownership cost but have no obligations and no capital commitment beyond the term of their lease. Think about the tenants the OP listed — a bookstore and a restaurant. Do you honestly think someone would start a bookstore or a restaurant if their only option was to buy a building to operate in? The time option is of a huge benefit to the typical tenant and, of course, like anything it costs something. Of course, there are some terrible landlords out there, but if they were all so bad, tenants would band together and jointly purchase property as a co-op. That this doesn’t happen on a broad basis in the commercial property market even in markets where there is availability of small to medium spaces at relatively low cost tells me the tenants are getting something valuable out of the arrangement.

bsanr 7y ago
The business 101 was unnecessary. What matters in this scenario is that these businesses are under government order not to operate. They are unable to make money. Deferment, then, amounts to a catch-22: pay now and go bankrupt; defer, have finances hampered well into the future, and still go bankrupt; or break the lease, shutter the business, and start up elsewhere. The building owner loses a tenant should any of these scenarios play out, and only receives income in the first (wildly cynical) two. The proper thing to do would be to either waive rent, ask for a percentage relative to the business that could be completed, or to automatically defer payments if they don't arrive on schedule. You can understand why some would find it unconscionable to insist on anything resembling business-as-usual during this time. Capital owners should be expected to be active supporters of their community interests. If not, I'm unconvinced that they shouldn't simply be chucked out with whatever charity proffered; what good are they?

bsanr 7y ago

The business 101 was unnecessary. What matters in this scenario is that these businesses are under government order not to operate. They are unable to make money. Deferment, then, amounts to a catch-22: pay now and go bankrupt; defer, have finances hampered well into the future, and still go bankrupt; or break the lease, shutter the business, and start up elsewhere. The building owner loses a tenant should any of these scenarios play out, and only receives income in the first (wildly cynical) two. The proper thing to do would be to either waive rent, ask for a percentage relative to the business that could be completed, or to automatically defer payments if they don't arrive on schedule. You can understand why some would find it unconscionable to insist on anything resembling business-as-usual during this time. Capital owners should be expected to be active supporters of their community interests. If not, I'm unconvinced that they shouldn't simply be chucked out with whatever charity proffered; what good are they?