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I know Louis Rossman has posited that landlords are handcuffed by mortgages that require additional capital calls when rental rates decline. That may be a fact
by valuearb 6y ago
I know Louis Rossman has posited that landlords are handcuffed by mortgages that require additional capital calls when rental rates decline.
That may be a factor but it’s not the primary cause. This has been going on forever because commercial leases are usually 5-20 year commitments.
I’ve danced the dance with many landlords where they act interested in having you lease, but clearly your business isn’t what they consider a “good tenant” so they draw things out while they continue to look for a “better” tenant.
- gogopuppygogo 6y agoI worked with a commercial broker in NYC up till the pandemic broke out. The empty spots in the city do speak with prospective tenants but often have unrealistic requirements for small companies and unrealistic pricing. Beyond the rent you may be required to have seven figures liquid to be in a position to secure a lease. Especially for a restaurant. Especially if there is a buildout.
- valuearb 6y agoOf course you do. Would you spend a hundred thousand on a custom buildout for a $1M lease if there was a significant risk the tenant would stop paying only a fraction of the way into the lease? Things get a lot easier if you can take the space as is. But even then, if the landlord thinks your business is at a high risk of closing within a year, what’s the point? Why not spend most of that year finding a secure tenant likely to last for a decade or more.
- gogopuppygogo 6y agoThere are very few small companies with liquid cash reserves in the seven figures. This makes Manhattan commercial real estate unaffordable for them. This leaves many empty stores in Manhattan.