This week we heard that #acookscompanion – http://www.acookscompanion.com/ – a solid #cobblehill #brooklyn neighbor and stalwart retailer on #Atlanticavenue between Court & Clinton for over 2 decades will be closing it’s doors … all of their stock is now heavily discounted so shop early and often if you read this post and need a kitchen utensil ASAP.
A common misconception in real estate is that “the landlords drove the poor retailer out of business by “jacking” up the rents too high” … let’s clear up this misconception shall we … rent is one of the single most expensive line items on any profit & loss statement and equals from 4 – 10% of the overhead cost in any viable and sustainable enterprise. It’s a BIG number we grant you … but taken over a year long view instead of a snapshot … rent is more predictable than the cost of liability insurance, advertising, real estate taxes, labor (minimum wages, workers comp & disability & now the family leave act) and the cost of materials. All of these variable costs add up to 30% – 60% of the overheads costs … 3x, 4x, 5x more than rent.
Plus … rent is set for a medium to long term … every landlord has to stick to the terms of the lease because he/she or they are bound by law … nobody can renegotiate a #commerciallease in yr 3 of a 5 year lease just because they feel like it … or use the excuse that they are the new owners of the property or “their” cost structure has changed & they need to pass it on (good luck with that one in front of a judge) … if you buy a building & a commercial tenant has a super sweet deal … tough luck – what are your options ? …walk away aka default on your loan obligations, spend MORE money & invest in other parts of the building or spend MORE money “buy out” the tenant … a lease buy out is like Father Christmas, Chanukah Harry & the Tooth Fairy all showing up at your doorstep on your birthday 😀
So the next time you hear of a mom & pop shop closing … please enlighten the cynic who lambasts the landlord/landlady and accuses them of unbridled greed. The greed part is when the lease is being negotiated … and every tenant shops around and explores their alternatives (and monthly rent) before deciding on one property over another … have you every heard of a retailer who signed a lease for the FIRST and ONLY store they viewed ? It’s a brokers nightmare … we want to manage our customers expectations from Day 1 so that when we negotiate & present a fair lease after weeks and months of unpaid effort with a decent landlord they will move forward with confidence in their ability to make a tidy profit in their new retail location.
Now … next up is a question … which nice folks who need to “pay their bills” and “feed their families” will open up next in 197 Atlantic Avenue ? .. Smith Hanten intends to wish them well & spend money if their merchandise appeals to us … actions speak louder than words & you can’t pay your rent with likes and shares … #amazon, #eBay, #walmart, #Etsy … none of these #unicorn companies are going to make our #brownstonebrooklyn #bococa community any stronger … in fact these shopping platforms make it weaker overall because we stop talking to each other and neglect to #shoplocal and #supportyourneighbor