Quote:
Originally Posted by katezbox
SABR,
You are being logical - but, yes, also a bit oversimplified. Yes, the landlord makes a profit on properties rented. But he (sorry business gals) also assumes liability for property damages and risks. Some of this can be passed on to the tenant, but...
The main issue is the old time value of money. Let's assume you and 4 colleagues have $500,000 to buy a parcel of land to build a store/restaurant. By investing in the business, you lose the opportunity of investing it elsewhere. If you have to borrow the money, that may cost as much over time as rent. And you have the risk/liability.... And only part of your cash outlay is deductible for taxes.... And you have to hire someone to manage the property...
Most of the chains and big box stores lease rather than buy. Why? For the reasons I outlined above plus leasing gives them the ability to walk away from a non-profitable location and they are in the retail/food service business, not the real estate business.
Personally, I would like to see TV offer some discounted rates at their properties on the squares. NOT because I think the developer OWES it to us (I DON'T), but because I think it is good business sense. Having so many stores vacant is an eyesore, it detracts buyers and some revenue is better than none.
k
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Darn you, Kate. Here you are bringing sense and economic reality into a discussion where emotion and financial ***** (pen*s) envy of the developer are primary motivators. Will you never learn?
Re your last point, I really like it. I believe that appearance of prosperity is critical to the success of such places as the squares. I wouldn't be a bit surprised if some of the smaller boutiques were already getting some break. Also, areas like Colony should be getting some rent/percentage breaks until construction across 466A picks up. May already be happening.
Seemingly, the major issue for TV businesses is in-season/off-season. Two apparent solutions seem to be different rents/percentages for different seasons or better business management so new owners don't confuse February profits with July projections.
But I could be wrong.
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