Reply to More profitable for DC landlords to "sit" on empty storefronts than rent at market rate??

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote]Thank you for this insight, but I don't think it really answers why commercial landlords are charging astronomical rents per month and keep raising them, even when it then drives a restaurant that does "good" business out. Ie, the restaurant would stay if the rent didn't keep soaring to unobtainable prices. In our neighborhood weve ended up with only fast food and fast express (high volume businesses). And banks. How does adding more residential density change anything? A sit down restaurant can only seat so many at a time. Perhaps the rents are what need to to be looked at, and a penalty for properties that sit empty for ages.[/quote]

We live in a free market economy.  What you think of as an "astronomical" rent may in fact not be.  Landlords ask for the highest rent they think they can get.  Sometimes, especially with new developments or heavily leveraged refinancings, a landlord's lender has set rent levels within the loan documents so that the landlord has to try to obtain those rents and is willing to wait for months in order to get them.  Fast food and banks pay high rent.  Banks are great credit---they always pay the rent and they require much less than the average restaurant in terms of Tenant improvement allowances.  WaWa is a great example of a fast express user who set out 5 years ago on a major effort to compete with 7-11 in urban markets---they went into Columbia Heights, Adams Morgan, G-town etc., with a willingness to pay a huge premium over the asking rents at the time.  [/quote]

So we want more vibrant density (ie high population) to get money out from the  bank and dine at Wawa? Or the empty storefront next to it? That doesn't sound like any urban planning to me. [/quote]

The restaurant tenants want the Landlord to pay for their build out which can be very expensive and to provide a certain amount of free rent and there is a brokerage commission associated with a new lease - that requires the landlord to come out of pocket for those funds  or borrow them - neither of which is likely to happen unless the tenant seems like a good credit risk which is often not the case with restaurants - you are asking the LL to make a pretty significant investment in a business that might not make it just for a neighborhood amenity.  The banks, kinkos, fedexes, etc.. all are a much better bet for the rent.  If you want to see what the DC gov should do - you could push for more low interest loans to mom and pop businesses that would put less of the financial burden of opening on the LL and then the rent would be lower. The costs of the lease are factored into the rent[/quote]

Why wouldn't landlords just raise their rents to account for the subsidy?[/quote]

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