The following is a transcript from a National Public Radio interview. We agree that with all that's going on with the economy, asking your landlord to lower your rent is a good idea. If you think this is something you'd like to entertain, but you're not sure how to go about it, give us a call or drop us an e-mail. We'll help steer you in the right direction! Georganne & Rich
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Kai Ryssdal: "We've all heard how bad this economy's been for retailers. It was the worst holiday season in decades, right? Well there's a whole chain of things that happens once consumers stop spending, and it starts with the physical retail space itself. A survey out today from the real estate research firm Reis says vacancies at malls and shopping centers are approaching a 10-year high. The sight of a darkened storefront does nothing to attract foot traffic, of course, so landlords are eager to keep as many tenants as they possibly can. And that is putting retailers in a pretty decent negotiating position. Ashley Milne-Tyte reports."
Ashley Milne-Tyte: "Jonathan Plotkin is a partner with real estate developer The Jaffe Companies in Illinois. One of their properties is a strip mall in the Chicago suburbs. Plotkin recently got a call from a national retailer who occupies a third of the space. The retailer told him they were closing stores all over the country."
Jonathan Plotkin: "And that this one was on the list to be cut unless they could figure out how to operate more profitably there in a declining market. Well one way is to cut your costs, i.e. rent."
Retailer and landlord did a deal and the store stayed -- paying 15 percent less rent than before. Bryan Eshelman of Alix Partners helps worried retailers avoid the slide into bankruptcy. He says when banks won't negotiate, landlords are an obvious next step.
Bryan Eshelman: "Many retailers with whom we're working, we are advising to do this quickly, because our feeling is that the first companies that do ask for concessions have a better chance of getting them."
Even if they don't strictly speaking need the break.
Ashley Milne-Tyte: "Jonathan Plotkin is a partner with real estate developer The Jaffe Companies in Illinois. One of their properties is a strip mall in the Chicago suburbs. Plotkin recently got a call from a national retailer who occupies a third of the space. The retailer told him they were closing stores all over the country."
Jonathan Plotkin: "And that this one was on the list to be cut unless they could figure out how to operate more profitably there in a declining market. Well one way is to cut your costs, i.e. rent."
Retailer and landlord did a deal and the store stayed -- paying 15 percent less rent than before. Bryan Eshelman of Alix Partners helps worried retailers avoid the slide into bankruptcy. He says when banks won't negotiate, landlords are an obvious next step.
Bryan Eshelman: "Many retailers with whom we're working, we are advising to do this quickly, because our feeling is that the first companies that do ask for concessions have a better chance of getting them."
Even if they don't strictly speaking need the break.
Real estate developer Jonathan Plotkin again: "I had a conversation with a director of real estate from a national chain, who told me, that they had a mandate come down -- and they're very successful -- from, you know, management, saying that whatever deal that you're working on right now, cut the rent by 20 percent."
He says retailers definitely have landlords over a barrel. But he'd rather give ground on rent than lose a tenant that helps keep the entire mall busy. In New York I'm Ashley Milne-Tyte for Marketplace.
Yeah, I went to the mall the other day. It's been a while since I have been, the way the economy is right now, it's pretty obvious how it's affecting the mall. There were a few empty stores and many of the kiosks I used to stop by were gone. There used to be a Starbucks as soon as you would enter the main entrance, that was replaced by a cheap jewelery repair shop. There was a t-shirt airbrush artist located in, get this... the FOOD COURT. It was really strange. Sad, really.
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