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this post was submitted on 04 Jan 2025
885 points (98.2% liked)
Comic Strips
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I'm not sure your example tracks as there'd be no reason for a grocery store to pay rent without occupying the space. In this analogy, it would need to be some sort of office which would have some tangential effect on surrounding businesses (like restaurants), but those restaurants could just relocate to where the people are now in their homes.
The Zombie Pharmacies That Are Holding Back New York City Retail
TL;DR
The most common reason is a concept called “dark rent.”
Pharmacy companies are seeking to cut their losses by shuttering unprofitable stores that have high labor costs, Mr. Hill said, but in most cases they are obligated to continue paying the rent long after the store closes, or goes dark.
Most of the pharmacies that have closed in recent years were signed to 10-, 15- or even 20-year leases, at rents that often exceed today’s rates, brokers said.
In these cases, a landlord has almost no incentive to seek a new tenant, allowing the store to sit empty for months or years, said Aric Trakhtenberg, an associate director at Newmark, a real estate firm.
For the landlord, “it doesn’t make sense to make a deal,” Mr. Trakhtenberg said.
Because of zoning laws in a lot of places that's not possible.
For instance, where I live, restaurants are restricted to commercial zones. Housing is restricted to residential zones.
That also gets into the question of "why" do we have zoning laws, and that gets complicated, because it was most beneficial in separating factories and utilities, and very noisy and polluty things from where people lived.
Unfortunately they also had the idea that any enterprise fell into this idea, and the other businesses didn't want to mix with other polluters and residents and it became a big mess
You might also not want a bar opening its doors above your apartment because there's no zoning laws... Or for all arable land to be converted to factories and shopping malls more than they've already been.
The problem, to me, is more that the people managing zoning aren't doing it logically and, in some cases, don't have enough control over what commercial zoning means.
Example from around here: Having two Best Buy a couple hundred meters from one another in a location where there's no groceries makes no sense, but because it's all commercial the city can't prevent it? That's bullshit.
I work in commercial real estate. That was a real example. They continue to pay rent so they don’t have to pay termination fees.
And yes, personally I agree they should fail or relocate but that’s not what investors in the property think.