Retailers are battening down the hatches, readying for the approaching storm. MIT Center for Real Estate shows signs of the coming wind. Retail property prices have been falling significantly in America’s top ten cities when compared to past years (click chart). Yet retail closures, while mounting, still haven’t hit recession levels.
Despite such gloomy scenarios, experts in properties say that such anticipation of softness in the property market makes this a brilliant time for franchisees to negotiate better property deals.
Dan Rowe, CEO of Fransmart, a franchise development firm whose services include finding prime retail locations, has talked with various commercial landlords across the country. He sums up what they are telling him. “This is a terrible time to be a landlord, but a great time to be a tenant,” says Rowe.
Irwin Barkan, a master franchisee for Mail Boxes Etc. and a former franchise owner of six Dunkin’ Donut shops in New England, is a commercial realtor of some 30 years. He agrees that this is a great time to invest in and negotiate property if you have the funds.
“Prices on retail real estate are falling. There is no question about it. And rents are softening,†Barkan declares. “The transaction amount of retail property has plummeted, some say 90% in a year.â€
Barkan sees the falling value adjustments in property as showing up in lower rents, both asked and received. He observes, “Owners who do not have to sell realize that they will be holding their assets at reduced values for several years at least.â€
Rowe agrees with such an appraisal of the property buying market but thinks that such pressures have implications for franchisees who lease property. Read Blue MauMau’s full post.
