Empty Store: A Great Business Decision
Even as the Great Recession seems to be winding down, things are still tough. Even in the best of times, empty retail space is not unheard of, but sometimes, landlords make decisions which ultimately become costly mistakes.
People are in business to make money, people buying small business for sale to make money too; you might think that their first duty is to create a quality product or provide outstanding service, but make no mistake, profit is the goal. That’s as it should be – after all, nobody would sell me falafel out of the goodness of their heart. Real estate works the same way; landlords purchase and rent property to make a profit, whether it’s an investment that they plan to sell later or otherwise, money is the objective.
Things don’t always go as planned. Take this empty store as an example: three or four years ago, it was a nail salon. The landlord informed the tenant that the rent would be raised in the next lease. The tenant explained that this increase would take her past the breaking point and the best business decision for the tenant would be to close up shop and go work for somebody else. The landlord was unyielding, and the shop was closed. The tenant tried to work out a temporary agreement; she could keep the salon open until the landlord found a new tenant, but the landlord “preferred to show the property empty.”
Aside from a few brief months as a second hand clothing store, the property has remained vacant ever since. (I believe the salon closed sometime in 2008.)
This seemed to me like a gross error in judgment. Perhaps the landlord felt the offer to stay on at the property under the old rate was a bluff. Perhaps costs (taxes and such) had risen to the point that the current rent was no longer profitable for the landlord. I don’t know exactly what happened as all my information came second hand, but my point is, isn’t some money better than no money? Hotels figured this out long ago; it’s better to rent out a room at a reduced rate rather than let it sit empty. Shouldn’t the same principle apply to the rental market, particularly in a recession? In a small town where parking is difficult to come by (meaning it’s hard to get people to patronize your business when there is no convenient place for them to park their car), having an empty rental property seems like a disaster. It seems as though this is even more critical and given the current tightness of credit and the ailing economy, it seems unlikely that people would be flocking to open new small businesses.
Still the property sits empty. Maybe the salon business that once occupied the space would have failed long before now, but as the months turned into years, you have to wonder what could have been for the sake of the landlord, the tenant and the neighborhood.