A Tennant Worth Keeping
"I just want to be able to work and live in this town." That's the view of the owner of the Waterfront Market regarding his lease negotiations with the City. Like everything in this city those negotiations seem to be dragging on and on. The parties are about $34,000 apart with some important differences. The City wants the yearly rent to increase 5% per year. This proposed increase is far more than annual inflation. There is no indication the Market will buy into this big an increase each year.
The City needs to realize that it is dealing with a grocery store not a bar. If the City wants a grocery store at that location, the City simply is not going to get the same amount of revenue as it would from a bar.
Many commercial leases have provisions that take a part of sales of a business. Those businesses, if they can, pass on this percentage to their customers. Here, that may not be feasible because competition in the grocery business is fierce. The only way for the Waterfront to survive is to be a specialty store like it is where its customers are willing to pay slightly higher prices for things they cannot easily get elsewhere. But even in the specialty store business, there is a limit to that kind of a mark up.
The City has an interest in preserving an institution (the true neighborhood grocery store) that is almost gone in most cities. This has value in the deal. It is a value the City needs to recognize because it benefits City residents and contributes far more to the quality of life of the neighborhood than any bar. This value, if the City will recognize it, could well account for dollar spread between the offers on the table.
We hope the two sides can come together on an acceptable compromise. We know the City thinks it needs the revenue, but the value of having the Waterfront Market at that location may outweigh other factors keeping the parties apart.
The City needs to realize that it is dealing with a grocery store not a bar. If the City wants a grocery store at that location, the City simply is not going to get the same amount of revenue as it would from a bar.
Many commercial leases have provisions that take a part of sales of a business. Those businesses, if they can, pass on this percentage to their customers. Here, that may not be feasible because competition in the grocery business is fierce. The only way for the Waterfront to survive is to be a specialty store like it is where its customers are willing to pay slightly higher prices for things they cannot easily get elsewhere. But even in the specialty store business, there is a limit to that kind of a mark up.
The City has an interest in preserving an institution (the true neighborhood grocery store) that is almost gone in most cities. This has value in the deal. It is a value the City needs to recognize because it benefits City residents and contributes far more to the quality of life of the neighborhood than any bar. This value, if the City will recognize it, could well account for dollar spread between the offers on the table.
We hope the two sides can come together on an acceptable compromise. We know the City thinks it needs the revenue, but the value of having the Waterfront Market at that location may outweigh other factors keeping the parties apart.
Labels: Business, Government
posted by Conchette at 8:19 AM
1 Comments:
In my opinion, the City is behaving shortsighted and foolish. The highest bidder is not necessarily the best tenant. First, they may not make it at the high rent. Second, there is a certain amount of intangible value, often referred to as goodwill, that is not easily put into the rent equation, and when ignored, does a disservice to a valuable tenant like the Waterfront Market.
When is Key West going to stop selling itself to the highest bidder at the expense of our authentic, charming, vibrant, and unique community character?
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