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Old 06-17-2020, 01:56 AM
 
Location: Silicon Valley
5,280 posts, read 2,338,878 times
Reputation: 8495

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My wife has a small dry cleaning agency. She has a small store that she's operated and run for the past 15 years. It makes a living, and until the stay at home order, was very stable with small increases each year. However, for 2020, we're definitely going to lose money. The largest expense is the rent.



Our lease has expired and we're renegotiating rates. The landlord is decidedly in the camp of this Covid is just a little blip and is almost over, and wants a rental schedule that will put us 10% higher. He also wants it for only 3 years and then to renew because he thinks a recent train station is going to make the place golden. I've pushed for 5 years saying this year is a loss and we'd need price stability over the next 4 just to make up the loss. It can't be done over 3.



Location is in a plaza at the corner of two 6 lane divided roads. We've been there for 15 years and it was in the distant family before that.



Looking for Options:
1. Suck it up, renew and hope for the best.

2. Move the store to a new location. Price point may not be better, but she has 1200 sf currently and only needs 800.

3. Move the store into our home which is < 1 mile away and closer than other plazas. (corner of 4 lane divided road and regular 2 lane street)

4. Other?
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Old 06-17-2020, 08:41 AM
 
Location: East of Seattle since 1992, originally from SF Bay Area
33,094 posts, read 60,101,561 times
Reputation: 36572
I had a similar situation in Bellevue, WA when my landlord was anticipating a big redevelopment with light rail expansion in mid 2006. When my 5 year lease expired he wanted to raise the rent from $2,200 to $3,000/month (1,900 sf). I moved the business to my home, as did an auto electric shop, a transmission shop, and a foam store. As it turned out the recession hit soon after, and the whole redevelopment thing just started last year. I would actually recommend #2, moving for you. For my business working from home and delivering products was easy since they were often paying me to install anyway, and some could be shipped. With dry cleaning you would either have to do pickup and delivery or face issues with traffic from your city. For me, a business license was available for home based but there were strictly enforced limits on the number of deliveries, customer visits, and signage.
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Old 06-17-2020, 09:11 AM
 
Location: Dude...., I'm right here
1,440 posts, read 914,976 times
Reputation: 1124
I'm surprised anyone is increasing the rent in this environment. You should have a upper hand in the negotiation unless you are in a prime location.

Are you dealing with an agent or the actual landlord?
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Old 06-17-2020, 09:46 AM
 
Location: Silicon Valley
5,280 posts, read 2,338,878 times
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Quote:
Originally Posted by Hemlock140 View Post
I had a similar situation in Bellevue, WA when my landlord was anticipating a big redevelopment with light rail expansion in mid 2006. When my 5 year lease expired he wanted to raise the rent from $2,200 to $3,000/month (1,900 sf). I moved the business to my home, as did an auto electric shop, a transmission shop, and a foam store. As it turned out the recession hit soon after, and the whole redevelopment thing just started last year. I would actually recommend #2, moving for you. For my business working from home and delivering products was easy since they were often paying me to install anyway, and some could be shipped. With dry cleaning you would either have to do pickup and delivery or face issues with traffic from your city. For me, a business license was available for home based but there were strictly enforced limits on the number of deliveries, customer visits, and signage.

I think so. While she has a lot of loyal alterations customers that would likely follow her to the home, I'm guessing we'll lose most of the dry cleaning business that way. Plus, I don't realistically want all those people coming to and from the house...customers can be odd. It would have to be a short term jump while things stay bad and once people actually start going to work again, yet another move as we get a store.


May as well skip the middle mess and go right to a new store. It's just...disappointing because I know that spot is going to sit open. The plazas in all the corners of this area all point to one another's rent rates...but the reality is they all have the same empties that were sitting open for a long time even before this hit. I think the store to the north of us quit as they've got the space for lease. It would be a better fit, but their quality always sucked....
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Old 06-17-2020, 10:37 AM
 
Location: Silicon Valley
5,280 posts, read 2,338,878 times
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Quote:
Originally Posted by 1ondoner View Post
I'm surprised anyone is increasing the rent in this environment. You should have a upper hand in the negotiation unless you are in a prime location.

Are you dealing with an agent or the actual landlord?

We don't know who the actual owner is, but we suspect it's property manager's Dad, who owns several properties in the area and used to directly manage. The son has been handling things for a decade now and is the new face, which everyone likes. He's decent and he actually manages. Dad is just one of those few that would stop a starving child from swallowing the food they were chewing on so he could pick out his share from the mouth first and save it for later.


As a property management company, the son has done very well. His name is across town and we've dealt with him on other properties for family agencies. His flexibility varies depending on the owner. I think we're at an impasse here on this one though.



There's basically 3 corners we can be at and not lose business.



Our corner is of course preferred. It's Vietnamese which is a match for my wife. The spots available are larger though and the smaller has bad parking, the next one is next to a pot store, another next to a naughty massage parlor. We'd prefer to stay where we're at.



To the north is 100% Chinese corner, and rent fluctuations can be severe. The dry cleaner there is pulling out, but they were also horrible. There's a Ranch 99 grocery store on that corner. The fight would be for people to see our good name instead of the old place. That will be tough, and if we get it to work, rumor has it rent increases are dictated by perceived success rate. (There's one place where the "family" has a dry cleaner that's seen as successful and a hair salon seen as marginal....right next to one another. Rent on one is $5/sf/m and on the other is $1.85/sf/m.)



The final corner is mixed. It has a Safeway, but right next to Safeway it also has a well established dry cleaning partial plant incumbent already there. They don't have the alterations business, they have higher prices and slower turnaround times than us....but gun to the head...they know what they're doing. It would be a fight. It also starts to move us a little closer than wanted to another family location. The old days are done...but there's no need to start trouble either.



Oh, grocery stores are good for dry cleaner agencies, btw.
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Old 06-17-2020, 12:07 PM
 
Location: Dude...., I'm right here
1,440 posts, read 914,976 times
Reputation: 1124
I'm a residential landlord and over the years I've raised rents only to match mostly property tax increases because insurance, etc have remained fairly constant or whenever they increase I can switch companies. I was due to increase rent on two of my tenants and then the covid thing happened. They are now on a month to month lease and I'm waiting for the situation to clear before I can decide my next move.

Our properties are paid off and we have a well paying jobs so as long as they pay the rent, we are good.
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Old 06-18-2020, 08:02 AM
 
5,387 posts, read 3,594,165 times
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If she only needs 800 of the 1200 sf, can she add anything else to bring in more revenues?
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Old 06-20-2020, 06:20 PM
 
1,785 posts, read 3,283,701 times
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Continue to negotiate the lease, while contacting other properties to see what the rate will be. Keep in mind, you'll have some cost in moving (new signage, moving equipment, painting, etc). If you really don't want to move, get some information on comparable properties with lower rent and present it to the landlord.
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Old 07-10-2020, 01:44 AM
 
Location: Silicon Valley
5,280 posts, read 2,338,878 times
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A new space next door opened up that's half the size. We signed a new lease yesterday. LL can suck it.
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Old 07-10-2020, 08:02 AM
 
5,387 posts, read 3,594,165 times
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Quote:
Originally Posted by artillery77 View Post
A new space next door opened up that's half the size. We signed a new lease yesterday. LL can suck it.
Yay, perfect. There is an empty space two doors down from us. Also much smaller. I've already told the landlord that we would be interested in moving there if things don't get back to normal.
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