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A big problem is Real Estate Investment Trusts. They buy up properties, shorten leases, and raise rents. They borrow money against future rents so they rather a
by _spduchamp 2y ago
A big problem is Real Estate Investment Trusts. They buy up properties, shorten leases, and raise rents. They borrow money against future rents so they rather a space stay vacant than lower a single rent. If they lower a rent it signals that they are borrowing against an inflated asset, which would cause a domino effect on their loans. REITs are considered stable investments, so everyone's mutual funds and pensions are full of this stuff.
As a small business owner, I'm very lucky to have mostly decent landlords, but I worry for the day that they sell out to REITs. Our business won't survive that.
- OptionOfT 2y agoAnd then the problem is that the rent increase is limitless (unless limited by your lease). If your business is doing well, they'll raise it to the maximum, and moving businesses is way harder than moving homes. No wonder that all the restaurants in the nearby newly built strip mall are large chains. They can pay the rent. But there is no space for the local couple that has a taco place. They can't compete on cost ingredients with say Chipotle. Sad.