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> The most common reason is a concept called “dark rent.” Pharmacy companies are seeking to cut their losses by shuttering unprofitable stores that have high la
by Pet_Ant 2y ago
> The most common reason is a concept called “dark rent.”
Pharmacy companies are seeking to cut their losses by shuttering unprofitable stores that have high labor costs, ... but in most cases they are obligated to continue paying the rent long after the store closes, or goes dark.
Most of the pharmacies that have closed in recent years were signed to 10-, 15- or even 20-year leases, at rents that often exceed today’s rates, brokers said.
In these cases, a landlord has almost no incentive to seek a new tenant, allowing the store to sit empty for months or years,
Surprised that the leases weren't tied to some shell company that could go bankrupt and release that liability.
- Nifty3929 2y agoThe building owner wouldn't have allowed that. The whole point of making these long-term NNN leases is that you're getting a very stable anchor tenant that will not default.
- ahmeneeroe-v2 2y agoexactly right. For the GP: Even though these leases are above current market value, they were probably cheaper at the time they were signed due to being long-term and bring signed by a higher credit rated tenant who would likely not default (vs a short-term lease with a riskier tenant)
- barryrandall 2y agoIt's a deliberate act intended to prevent competitors from moving in to the space.
- stonogo 2y agoTheir competition is online.
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- PaulHoule 2y agoDuane Reade in particular is famous for its Machiavellian approach to real estate. Sometimes I wonder if people who grew up in NYC think there are Duane Reades from coast to coast but they are hyperlocal or they were until they got bought by Walgreens/Boots Alliance.
- ahmeneeroe-v2 2y agoA savvy landlord would not accept this. Mostly landlords either want a Parent Guarantee (i.e. the parent corp to back up the lease liability) or would want to see the parent company sign the lease. Obviously there are a lot of factors that go into a negotiation and sometimes landlords are not able to secure those rental streams through one of those methods.