FU - Bank of America

the drunken guest · February 2007

Does anyone care that Bank of American has installed a two ATM storefront right across from Brooklyn Burger on 7th ave and 9th?

It is a terrible, terrible thing. The landscape has succumbed to yet another sterile, meaningless, worthless, makes me wanna throw a fucking rock threw the window, symbol of consumer culture and corporate greed...

There is an ATM on every corner of this city, 95% of businesses accept both debit and credit cards, - what possible NEED is there for a BOA outcropping??...there aren't even tellers in there. I know why the bank WANTS it... and I know that some of you are customers of BOA and may glean an ounce of convenience from the glowing red eyesore. Convenience is relative and realy the only argument in favor of the ATM... would it be more convenient for you BOA customers if we installed an ATM in your bathroom? Please don't give me the "I don't like paying ATM fees" argument. My advice to you is plan ahead...that's the way it was done for 200 years when banks were open from 10am to 4pm.

BOA has installed a street level billboard and in the process has driven up rent for me, for you, and for every small business owner in Park Slope. I hope the bum that stakes a claim on that place is a friendly.

pitu · February 2007

I have to agree with you.
Except I have the feeling for the ATM duo they put on the corner of 7th and Union.

sprite · February 2007

I'm with you on planning ahead; I use Bank of New York, and till Chase recently bought them I was always slapped with a fee if I used an ATM in the slope. So I started withdrawing money for the weekend on Friday afternoons, and it was much better for my budget. ATMs make it so easy to overspend.

sevenoneeighty · February 2007

Yea, This is the future of New YorK:A Re-creation of the susburbs complete with more asphalt to cater to the car society...

IMO The suburban style parking lot is the MOST offensive part, a close second is that shiny metal they use for the glass storefront system. What the F*Ck is that all about? This is an URBAN site. How were they allowed to get away with that building in Park Slope?

PRetty soon all we are going to be able to do is take out money and buy cellphones in NEw York.

A colleague told me that Harlems is trying to get a zoning resolution passed in certain districts that makes Banks go to the SECOND floor of inline sites to keep from killing the streetscape and street life after 5pm...Anyone know more about this?

But a bigger problem is: Who else can afford these sites/ rent besides big corporations and banks? For example, Do any of you know what building owners are asking for in rent in Park Slope?? How mush do you think the lot(s) were sold for where BOA sits. I'll have to check property shark....but they weren't cheap.

michaelkeys · February 2007

OK, first of all, I'm a BoA customer and I will not apologize for being tired of having to go to Brooklyn Heights or Manhattan, even, just to withdraw cash when I was a work-from-home freelancer here in the 'hood. As you can see, even though I planned ahead as you suggest, Drunken Guest--or made my weekly withdrawl, like you Sprite-- I STILL had to leave my neighborhood to do so. (And why should I pay unnecessary ATM fees? I'm already paying the bank a monthly fee for my account. And please, don't tell people how they should spend their money if you're not prepared to do it for them or equally incur in superfluous expenses yourself.) So, needless to say, I was glad when they opened a South Slope branch last year. That doesn't mean I agree with them blanketing the city a la Duane Reade, however. That is a problem that needs to be addressed. Like I said, I'm a BoA customer and I don't mind having one conveniently located, but I'm not crazy about them planting their flag every 3 blocks. Park Slope isn't that big where we need more than 2 branches of ANY bank.

I'm old enough to remember having a bank book and an account at a bank that was open 9-3 PM back in the day. Cool by me if they reverted back. Don't care one way or the other. It doesn't mean I'm going to shun a convenience that has been handed to me and which I did not have any say in producing. But as far as getting most people to revert back to old customs, good luck DG. Start with cell phone users--of which, I am not one, btw--and tell 'em to plan ahead, to wait to get to where they're going or just use a public phone to make a phone call, since their street yapping is a nuisance to many. See where that gets ya.

I don't necessarily disagree with you, DG but my problem--regardless of who I bank with--is with the landlords/RE speculators that ask for insane commercial rents that, as 7180 pointed out, only the likes of BoA can afford. That's who ruins the neighborhood's landscape. THEY are the enablers of the "consumer culture and corporate greed" that you're railing against. When deciding whether to rent to you or I for $5K/mo that little space to make our life-long dreams happen or give it up to BoA for $10K do you think they even consider for a second what's best for ANYONE but their pockets? Of course not.

anonymous · February 2007

SevenOneEighty wrote: How were they allowed to get away with that building in Park Slope?

It's called capitalism. A business has a right to open wherever they can legally want to open. What gives us the right to say which stores can open and which ones cannot. We need to vote with our dollars: if you don't want a business, simply do not patronize them. If everyone is truly against them, they will eventually close down. If they don't, then it only means many others have found their services to be beneficial to them.

SevenOneEighty wrote:
A colleague told me that Harlems is trying to get a zoning resolution passed in certain districts that makes Banks go to the SECOND floor of inline sites to keep from killing the streetscape and street life after 5pm...Anyone know more about this?

Why should the government be involved in dictating what business can do? Perhaps gays should wear blue hats (node to Borat). Tomorrow restaraunts most have locations only on the corner of streets. Politicians have better things to do. This problem is not a political one, it's an economic one. Don't want it, don't go there.

the drunken guest · February 2007

I agree with GUEST above... it is capitalism... and capitalism is what has made this a great country.

However, the current sociecty is stupid and lazy to truly know what is good for them.... capitalism is failing...

It would be great if everyone voted with their dollar but they are too busy at home watching American Idol or Deal or no Deal, getting haircuts, being told how to dress, molding their couch cushions to the perfect shape of their ass, and applying Crest White Strips to mobilize an effective effort against corporate America

belzjm · February 2007

getting haircuts?

capitalism is failing because i don't have long ungroomed hair? huh?

anonymous · February 2007

Sorry - we need a real bank-sponsored ATM on that part of 7th Ave, rather than the craptastic deli ATMs. And it's better than another (*#&$^% cellphone store! I just wish it was an actual BANK branch.

pitu · February 2007

Anonymous wrote: [quote=SevenOneEighty]How were they allowed to get away with that building in Park Slope?

It's called capitalism. A business has a right to open wherever they can legally want to open. What gives us the right to say which stores can open and which ones cannot. We need to vote with our dollars: if you don't want a business, simply do not patronize them. If everyone is truly against them, they will eventually close down. If they don't, then it only means many others have found their services to be beneficial to them.

SevenOneEighty wrote:
A colleague told me that Harlems is trying to get a zoning resolution passed in certain districts that makes Banks go to the SECOND floor of inline sites to keep from killing the streetscape and street life after 5pm...Anyone know more about this?

Why should the government be involved in dictating what business can do? Perhaps gays should wear blue hats (node to Borat). Tomorrow restaraunts most have locations only on the corner of streets. Politicians have better things to do. This problem is not a political one, it's an economic one. Don't want it, don't go there.

O dear Guest, ZONING is an important and useful concept in civilized society.
Urban Planning is a beautiful thing, and can help your capitalism be a more pleasant experience.

SevenOneEighty, I'm totally interested in that Harlem initiative...do post if you see more about it.

michaelkeys · February 2007

Anonymous wrote: Sorry - we need a real bank-sponsored ATM on that part of 7th Ave, rather than the craptastic deli ATMs.

Least of all due to users of crappy bodega ATMs becoming frequent victims of identity theft.

anonymous · February 2007

You do realize that the more you gentrify a neighborhood, the more big businesses/banks/etc. are going to come in, right? Too bad it disturbs the view from your hip burger joint.

anonymous · February 2007

MichaelKeys wrote: [quote=Anonymous]Sorry - we need a real bank-sponsored ATM on that part of 7th Ave, rather than the craptastic deli ATMs.

Least of all due to users of crappy bodega ATMs becoming frequent victims of identity theft.

How's that now??? (user of bodega atms who does not want her identity to belong to anyone else but her)

michaelkeys · February 2007

Anonymous wrote: [quote=MichaelKeys][quote=Anonymous]Sorry - we need a real bank-sponsored ATM on that part of 7th Ave, rather than the craptastic deli ATMs.

Least of all due to users of crappy bodega ATMs becoming frequent victims of identity theft.

How's that now??? (user of bodega atms who does not want her identity to belong to anyone else but her)
I'm not saying it's going to happen everywhere but I know of a couple of people who've been victims of fraud that was traced back to street/bodega ATM usage. But just on a common sense level ask yourself, where is your info most secure: using a bank ATM; or a bodega ATM, that is not owned, serviced, operated or the responsibilty of the bodega? (They just get paid a rental fee for the space.) A no-brainer IMHO.

escap · February 2007

SevenOneEighty wrote: But a bigger problem is: Who else can afford these sites/ rent besides big corporations and banks? For example, Do any of you know what building owners are asking for in rent in Park Slope?? How mush do you think the lot(s) were sold for where BOA sits. I'll have to check property shark....but they weren't cheap.

Naturally I find this whole thread incomprehensibly absurd, but rather than try and tackle all of the inanity at once I'll just take issue with this one point since its implications are factually incorrect.

This comment and Michaelkeys' follow up both imply that a corporation can outbid a small business owner because it has greater cash reserves, but the fact is that businesses do not finance the leasing of these kinds of properties with cash on hand, but rather with profits yielded from the property itself. Thus, it wouldn't matter if BofA had $1 million, $1 billion or $1 trillion to spend, b/c it wouldn't spend a penny of that to secure the lease; it will only lease the property if it expects future profits from that property to be significant. Since, by logical extension a business will only be profitable if it is frequented by customers, the truth of the matter is that the business that most serves the community, that is most valued and needed by area residents, will be the one that can bid the most for the lease. If a coffee shop or record store was more valuable to the local community, it would easily be able to outbid BofA because of its greater profitability. (Oh, and who would be providing said small business with the upfront loan to get started? You guessed it, our "worthless" friends at the local bank branch.)

michaelkeys · February 2007

escap wrote: [quote=SevenOneEighty]But a bigger problem is: Who else can afford these sites/ rent besides big corporations and banks? For example, Do any of you know what building owners are asking for in rent in Park Slope?? How mush do you think the lot(s) were sold for where BOA sits. I'll have to check property shark....but they weren't cheap.

Naturally I find this whole thread incomprehensibly absurd, but rather than try and tackle all of the inanity at once I'll just take issue with this one point since its implications are factually incorrect.

This comment and Michaelkeys' follow up both imply that a corporation can outbid a small business owner because it has greater cash reserves, but the fact is that businesses do not finance the leasing of these kinds of properties with cash on hand, but rather with profits yielded from the property itself. Thus, it wouldn't matter if BofA had $1 million, $1 billion or $1 trillion to spend, b/c it wouldn't spend a penny of that to secure the lease; it will only lease the property if it expects future profits from that property to be significant. Since, by logical extension a business will only be profitable if it is frequented by customers, the truth of the matter is that the business that most serves the community, that is most valued and needed by area residents, will be the one that can bid the most for the lease. If a coffee shop or record store was more valuable to the local community, it would easily be able to outbid BofA because of its greater profitability. (Oh, and who would be providing said small business with the upfront loan to get started? You guessed it, our "worthless" friends at the local bank branch.)
First of all, since you combined your response to refer to more than one post I must clarify that I never deemed any banking institution "worthless". Secondly, I don't think you addressed my point, which was not one of neighborhood values--as you defined it--or profit projections per se.
Regardless of how corporations come about securing a lease, many landlords smell blood in the water. And because of this they choose to speculate on how much they can get from potential commercial tenants. MichaelKeys Bakery or Escap Savings and Loan? Which one does the greedy landlord THINK will net him a higher rent. THAT was my point.

(There's also the issue of a corporation being able to come up with that cash with a lot more speed than the small merchant--which most assuredly plays into the landlord's decision of who to rent to and how much to ask for--who, as you pointed out has to apply for a loan and go through all the necessary hoops. Much more wrangling to deal with than the corporation, I assume. But that's just a guess on my part.)

escap · February 2007

MK, you're right, I wasn't really addressing all of your points and wasn't attributing the "worthless" comment to you, just addressing the one idea that a large corporation can outbid a small business when it comes to rents, which is a really widely held fallacy and is completely untrue. As for landlords, most of them will seek the highest rents they can get, but if Escap Savings & Loan doesn't think it can make a lot of money on the site, it will not be willing to outbid MichaelKeys Bakery. So who cares what the landlord thinks? It's the more profitable business--ie the one that is more used by the community--that will in fact be able to pay the higher rent. Again, no matter how much $$ a company has, it will not waste that money on an unprofitable venture, and it will not bid based on its cash reserves.

As an example, Citigroup has more cash than God, but it has relatively few branches across the nation b/c it doesn't feel the return is worth the investment. Surely it could outbid Joyce's Bakery, but it chooses not to because Joyce makes a lot more money on that site than Citi would. Vanderbilt is not wall-to-wall Dunkin Donuts, Subways, Starbucks, and GAPs, not because those businesses are unaware of the locale or don't have enough cash to bid up rents; it's because the businesses that are currently there have higher expected profits going forward. Again, bidding power comes from alignment of the business with the needs of the local consumers, not from the balance sheet.

For truly small, start-up mom & pop shops with little or no business experience, securing financing may be difficult; but again, access to loans is driven by the business plan. A bank will lend a small business with high profits much more than it would a large business with low profits, so again the corporation has no inherent advantage, especially since commercial mortgages are non-recourse, meaning the larger balance sheet is not used as collateral. And yes, even a huge corporation like BofA will borrow money in order to finance a new branch, in order to take advantage of leveraged returns, the tax shield, etc. The tens of thousands of small businesses in NYC (not to mention overnight large businesses like Netflix and Freshdirect) provide proof that obtaining a loan for a good business plan is hardly an insurmountable goal, and especially so in today's environment.

michaelkeys · February 2007

escap wrote: MK, you're right, I wasn't really addressing all of your points and wasn't attributing the "worthless" comment to you, just addressing the one idea that a large corporation can outbid a small business when it comes to rents, which is a really widely held fallacy and is completely untrue. As for landlords, most of them will seek the highest rents they can get, but if Escap Savings & Loan doesn't think it can make a lot of money on the site, it will not be willing to outbid MichaelKeys Bakery. So who cares what the landlord thinks? It's the more profitable business--ie the one that is more used by the community--that will in fact be able to pay the higher rent. Again, no matter how much $$ a company has, it will not waste that money on an unprofitable venture, and it will not bid based on its cash reserves.

At the root of my point is the assumption that the unscrupulous, hypothetical landlord in question is separately offering the property--unbeknownst to the parties, which happoens every day-- to Escap S&L for 10K/mo and MK Bakery for 5K/mo. the latter being the current market rate. If ES&L deems this not to be worthy of their expense, they'll pass and MKB gets it for what the landlord wanted. But if there's a chance--and, once again, this is where the speculation comes in--that ESL can justify it profit-wise, the landlord just made a nice little killing. And he/she/it is willing to take that chance because, again, the assumption--incorrect, as you have stated--is that ES&L has more liquidity than MKB.
Also, in this last scenario it doesn't matter whether the 'hood needs/wants MKB more, because even if it's a solidly profitable enterprise it will be trumped by ES&L's ability to pay twice as much rent, based on their calculations.

Also, I'm sure that--as I have been told--as long as landlords get tax breaks equal to the amount of what their unrented commercial property's market rent would be, they won't make any moves towards reasonable rents unless forced by a market not in their favor. And that, is a big deal.

escap · February 2007

MichaelKeys wrote: At the root of my point is the assumption that the unscrupulous, hypothetical landlord in question is separately offering the property--unbeknownst to the parties, which happoens every day-- to Escap S&L for 10K/mo and MK Bakery for 5K/mo. the latter being the current market rate. If ES&L deems this not to be worthy of their expense, they'll pass and MKB gets it for what the landlord wanted. But if there's a chance--and, once again, this is where the speculation comes in--that ESL can justify it profit-wise, the landlord just made a nice little killing. And he/she/it is willing to take that chance because, again, the assumption--incorrect, as you have stated--is that ES&L has more liquidity than MKB.
Also, in this last scenario it doesn't matter whether the 'hood needs/wants MKB more, because even if it's a solidly profitable enterprise it will be trumped by ES&L's ability to pay twice as much rent, based on their calculations.

Also, I'm sure that--as I have been told--as long as landlords get tax breaks equal to the amount of what their unrented commercial property's market rent would be, they won't make any moves towards reasonable rents unless forced by a market not in their favor. And that, is a big deal.

Huh? Why would ES&L be able to pay twice as much if it made less money? Did you read anything I wrote?! And why would ES&L be any more prone to reckless speculation and risk-seeking than MKB; if anything the more experienced business would be less likely to err in judgment. Again, liquidity is a non-issue, because these loans are non-recourse!

There's a great example in Fort Greene right now that perfectly illustrates my point. There was a Blimpie's on S Elliot and Lafayette that opened last year and has now gone out of business. Now, surely a giant national chain like Blimpie's could plow more money into that shop to keep it open--it has the liquidity, right? Furthermore, surely it could be profitable at some level of rent, just not the one it was paying. On the other hand, opening in its place is--you guessed it--a small business (looks like a bakery in fact). This bakery, a mom and pop operation without the vast resources of national corporate status, has essentially outbid a corporate chain because it (and the bank that financed it) expects to be more profitable than Blimpie's was. So here you have the exact scenario you were talking about--a landlord charging more than its tenant could afford and kicking that tenant out in favor of another merchant with better cash flows--but in exact reverse order. This happens all the time.

I'm curious as to why you call a landlord greedy and unscrupulous for seeking the highest rent possible but you don't hold tenants to the same standard for seeking the lowest rent possible. But that kind of hypocrisy is standard for this board so I really don't care. The bigger issue here is the fallacy that a corporation can necessarily outbid a small business--it's one of the great popular myths, and it really needs to be quashed.

homeowner · February 2007

I read the following today and thought about this disucssion. While Commerce doesn't have the same business model as a Citigroup or B of A, it does make you wonder what deals may be going on behind the scenes.

Commerce Bankâ€™s Related-Party Dealings Draw a Federal Investigation
Biz Briefs
NJBIZ Staff
1/22/2007

Commerce Bancorp, the largest bank based in the state, is under investigation by federal bank regulators over possibly questionable transactions between the bank and its officers and directors. The Federal Reserve and the Office of the Comptroller of the Currency are reviewing dealings with related parties, some of which involve bank branches. Officials of the Cherry Hill-based bank say theyâ€™re cooperating with federal officials; federal officials wouldnâ€™t comment about the investigation.
Meanwhile, Commerce issued a statement saying a committee made up of independent board members has been organized to oversee the bankâ€™s activities during this period.

Commerce operates 400 branches from Florida to Connecticut. On news of the investigation, the bankâ€™s shares fell $2.89, or 8.3 percent, to $31.83 on the New York Stock Exchange. The sharesâ€™ 52-week range has been $30.45 to $41.20

Commerce has long been criticized for making real estate deals with the bankâ€™s founder and CEO, Vernon W. Hill II. According to a proxy statement issued by the bank in April 2006, Commerce leases space and land from a Hill-family trust or limited partnerships that include Hill. Commerce built 17 branches, all in New Jersey, on those properties. The bank paid $1.9 million in 2005 for the leases that the banks are built on, according to Commerceâ€™s SEC filings.

kaiserkai · February 2007

Escap,

all valid points.
I do actually agree with you.
But, and that also happens all the time, some corporations are willing to take losses at a certain branch just to have a footprint in the particular area.
For example lets say Chase opens a branch somewhere in PS, I would bet money on Citibank opening up soon thereafter in and close by.
The community doesnt need both, and they both might not actually be profitable but to keep the footpring and the name out there theyll take the losses.
That is something a Mom and Pop store cant do.

sprite · February 2007

MichaelKeys wrote: OK, first of all, I'm a BoA customer and I will not apologize for being tired of having to go to Brooklyn Heights or Manhattan, even, just to withdraw cash when I was a work-from-home freelancer here in the 'hood. As you can see, even though I planned ahead as you suggest, Drunken Guest--or made my weekly withdrawl, like you Sprite-- I STILL had to leave my neighborhood to do so. (And why should I pay unnecessary ATM fees?

Fair enough. I admit I'm a lot happier now that I can use the Chase ATMs without paying fees. Though my bank account might be suffering as a result.

michaelkeys · February 2007

MichaelKeys wrote: At the root of my point is the assumption that the unscrupulous, hypothetical landlord in question is separately offering the property--unbeknownst to the parties, which happoens every day-- to Escap S&L for 10K/mo and MK Bakery for 5K/mo. the latter being the current market rate. If ES&L deems this not to be worthy of their expense, they'll pass and MKB gets it for what the landlord wanted. But if there's a chance--and, once again, this is where the speculation comes in--that ESL can justify it profit-wise, the landlord just made a nice little killing. And he/she/it is willing to take that chance because, again, the assumption--incorrect, as you have stated--is that ES&L has more liquidity than MKB.
Also, in this last scenario it doesn't matter whether the 'hood needs/wants MKB more, because even if it's a solidly profitable enterprise it will be trumped by ES&L's ability to pay twice as much rent, based on their calculations.

Also, I'm sure that--as I have been told--as long as landlords get tax breaks equal to the amount of what their unrented commercial property's market rent would be, they won't make any moves towards reasonable rents unless forced by a market not in their favor. And that, is a big deal.

escap wrote: Huh? Why would ES&L be able to pay twice as much if it made less money? Did you read anything I wrote?! And why would ES&L be any more prone to reckless speculation and risk-seeking than MKB; if anything the more experienced business would be less likely to err in judgment. Again, liquidity is a non-issue, because these loans are non-recourse!

No! You didn't understand me! OK... First of all, no one is talking about making less money. I don't know where you got THAT from. What I'm saying is that hypothetically ES&L figures out it CAN do business at 10K/mo. rent NOT KNOWING that it's being offered to MKB for 5K/mo. Again, this is the landlord speculating on the rental price. Wasn't I clear about that? I feel like we're going 'round in circles. Anyway...

escap wrote: There's a great example in Fort Greene right now that perfectly illustrates my point. There was a Blimpie's on S Elliot and Lafayette that opened last year and has now gone out of business. Now, surely a giant national chain like Blimpie's could plow more money into that shop to keep it open--it has the liquidity, right? Furthermore, surely it could be profitable at some level of rent, just not the one it was paying. On the other hand, opening in its place is--you guessed it--a small business (looks like a bakery in fact). This bakery, a mom and pop operation without the vast resources of national corporate status, has essentially outbid a corporate chain because it (and the bank that financed it) expects to be more profitable than Blimpie's was. So here you have the exact scenario you were talking about--a landlord charging more than its tenant could afford and kicking that tenant out in favor of another merchant with better cash flows--but in exact reverse order. This happens all the time.

See kaiserkai's point about footprints.

escap wrote: I'm curious as to why you call a landlord greedy and unscrupulous for seeking the highest rent possible but you don't hold tenants to the same standard for seeking the lowest rent possible. But that kind of hypocrisy is standard for this board so I really don't care.

Thanks for not being able to keep it civil and revert to insulting and lumping me in with any old hypocrite. Cool. Fine. I'm not going to take it personal and reciprocate. I'm better than that. Obviously, I've touched a nerve here. That or you are given to random insults. Regardless, I'll respond anyway.

ANYONE that uses dishonest means to acquire goods, benefits, services, etc. is being unscrupulous, and that applies to me cheating on my taxes, wholesale lying on a job aplication, or a landlord not being forthcoming about rent, the condition of the property, etc. Clear enough for ya, Judge Escap?

escap wrote: The bigger issue here is the fallacy that a corporation can necessarily outbid a small business--it's one of the great popular myths, and it really needs to be quashed.

Since in my example there is NO ALLUSION TO BIDDING WHATSOEVER--clearly, each participant is individually and secretly offered a separate rental price--I'm not going to address this last statement.

homeowner · February 2007

escap wrote:
There's a great example in Fort Greene right now that perfectly illustrates my point. There was a Blimpie's on S Elliot and Lafayette that opened last year and has now gone out of business. Now, surely a giant national chain like Blimpie's could plow more money into that shop to keep it open--it has the liquidity, right? Furthermore, surely it could be profitable at some level of rent, just not the one it was paying. On the other hand, opening in its place is--you guessed it--a small business (looks like a bakery in fact). This bakery, a mom and pop operation without the vast resources of national corporate status, has essentially outbid a corporate chain because it (and the bank that financed it) expects to be more profitable than Blimpie's was. So here you have the exact scenario you were talking about--a landlord charging more than its tenant could afford and kicking that tenant out in favor of another merchant with better cash flows--but in exact reverse order. This happens all the time.

I'm not sure that this works as an example because Blimpie's is a franchise. Unless that particular store is corporate owned, its esentially just another neighborhood small business that has to compete with other small businesses. In fact, this might be even worse because as a franchise you only have a certain amount of leeway in your pricing of the goods. I'd also wonder if the landlord kicked out the Blimpie's or if the franchise owner wasn't able to make a go of it and got out of his lease at the first possible chance.

charlesbklyn · February 2007

The responsibility for making the store fronts reflect the neighborhood is upon the landlords. As a family who owns store fronts in this area, we would never rent to a corporation whose sole purpose was exposure and ATM service. But sadly, these buildings are becoming less connected with the neighborhood, and more with for-profit real estate corporations and individuals.

And it must be noted, to keep the old-school businesses afloat, they require below market rents. Who could ever compete with corporate businesses that can lose money and still pay the rent?

The Old Brooklyn is slowly dying, and what it is being replaced with is both good and bad, such as before. If you really want to have this neighborhood remain the same Brooklyn, make sure city and state officials don't pass laws and policies to enrich developers at the expense of everyone else.

Other than that, there is nothing to stop a landlord from "Doing the Wrong Thing ..."

Charles M
Park Slope, Bklyn

escap · February 2007

Okay folks, some good points made all around. MK, I apologize for name calling. I get what you were saying, but I fundamentally disagree that a landlord has any obligation of transparency. If he "covertly" offers a corporate chain $10K a month, there's still nothing stopping that corporation from shopping around to other landlords and seeing if it can get a better deal elsewhere. That's how a market works, not by just comparing what the current tenant is paying. To use another example, if I worked for Company ABC but was shopping around for another job, I would not be obligated to tell Company XYZ my current salary during negotiations. If XYZ loved me and wanted to pay me $50K more than I was currently making, I don't think I'd be "unscrupulous" in accepting the offer. And btw, there is nothing to stop the landlord from doing the exact same thing in reverse if he thinks the smaller business will be more profitable!!

As far as bidding power, I will concede some caveats to my main point. Depending on circumstances, a large corporation may have the ability to bid higher than a small business due to such factors as a) lower financing costs if it has a long history of success and longstanding relationships with its lenders; b) lower costs due to economies of scale, managerial expertise, leverage over suppliers, etc., that enable a higher profit margin based on the same sales; c) limited liability--i.e., true mom & pop business might literally have collateralized their own house or other assets to start up, so they might be far more risk averse than a limited liability corporation whose losses are limited to the initial investment; d) other intangibles like the above-mentioned willingness to accept a loss for market share, etc.

Now, just to in turn refute these points, I'd say: a) an experienced smaller merchant may well be able to obtain excellent rates; moreover, in the example we are discussing the smaller business is already in place, so doesn't have to worry about start-up costs or convincing a bank that his model works. He can point to a history of success, which is far more compelling than a chart of projected success, so he has a big leg up as the current tenant; b) assuming a competitive market, lower costs will ultimately be translated into lower prices, which will benefit consumers but not create a sustainable profit increase; c) most businesses that we are realistically discussing do in fact have limited liability and non-recourse financing; d) corporations willing to take a loss is the exception, not the rule. If anything, corporations are much more relentless in their drive to maximize profit; by contrast, many small business owners partially work for the pleasure of it and aren't worried about every last dollar and cent.

Finally, in turn, there are advantages that the small owner has. For example, he/she doesn't have layers of bureaucracy to overcome and can directly oversee what's going on in the store. There is no agency problem, where the owners are disconnected from managers and interests unaligned. Personal ties to the community may provide a loyal customer base driven by relationships and a sense of "supporting our local merchant" that no large corporation can hope to copy. As the current tenant, he has experience in that particular location and therefore fewer surprises. And so on. So I'd say the two sides are mostly a wash, and in the end it once again comes down to which business better serves the community. The business that convinces more area residents to spend their money there will ultimately have far more ability to pay higher rents and will win the right to continue operating.

michaelkeys · February 2007

I accept your apology, escap. Frankly, I was surprised at your reaction because despite the fact that we don't seem to agree on much, in the short time I've been on here I've ALWAYS found your posts to be of the highest caliber, regardless of my feelings on the subject at hand. Cheers.

sevenoneeighty · February 2007

Anonymous wrote: [quote=SevenOneEighty]How were they allowed to get away with that building in Park Slope?

It's called capitalism. A business has a right to open wherever they can legally want to open. What gives us the right to say which stores can open and which ones cannot. We need to vote with our dollars: if you don't want a business, simply do not patronize them. If everyone is truly against them, they will eventually close down. If they don't, then it only means many others have found their services to be beneficial to them.

SevenOneEighty wrote:
A colleague told me that Harlems is trying to get a zoning resolution passed in certain districts that makes Banks go to the SECOND floor of inline sites to keep from killing the streetscape and street life after 5pm...Anyone know more about this?

Why should the government be involved in dictating what business can do? Perhaps gays should wear blue hats (node to Borat). Tomorrow restaraunts most have locations only on the corner of streets. Politicians have better things to do. This problem is not a political one, it's an economic one. Don't want it, don't go there.
Guest, please take a look: Department of City Planning and Zoning:

http://home2.nyc.gov/html/dcp/html/125th/125th6.shtml

"In keeping with 125th Street's pedestrian vibrancy, the zoning proposal seeks to improve the pedestrian experience by ensuring that active uses occupy the ground floor of new developments and that their street frontage includes some degree of transparency. In connection with these requirements, the proposal would also limit the ground floor frontage of banks and similar â€˜non-active' uses."

Capitalism, yes.
But quality of life is also a part of the equation. To that end, laws are passed that are perceived to provide or assist quality of life issues.

escap wrote: [quote=SevenOneEighty]But a bigger problem is: Who else can afford these sites/ rent besides big corporations and banks? For example, Do any of you know what building owners are asking for in rent in Park Slope?? How mush do you think the lot(s) were sold for where BOA sits. I'll have to check property shark....but they weren't cheap.

Naturally I find this whole thread incomprehensibly absurd, but rather than try and tackle all of the inanity at once I'll just take issue with this one point since its implications are factually incorrect.

Escap, that is simply NOT always true nor accurate.
Yes, that happens but their are other examples as well.
My firm just completed a building in Queens. We designed it, bid it out, performed the construction administration, made the attorney general's filing- the whole process. It is a condo building with retail on the ground floor.

The owner went with a large national drug store chain because they could get the most MONEY from them and they OUTBID the smaller "mom and pops" with cash up front and a HIGHER lease price and longer lease terms. (the space cold have been divided in to 4 different lots for retail). They have a series of packaged formulas, lawyers, real estate agents and marketers that are more streamlined, experienced with negotiation and know how to "get" properties. So that is good for them - but they are a big machine.

Economic Theories are nice, but I do this for a living and I can tell you many other instances in residential/ retail projects: It really IS about the money.

There really IS a reason why there are so many cell phone stores and banks on the UWS and soon 5th and 7th ave in PS. Its not just because their business plans (while theirs definitely made the owners happy) are better....Because of their corporate cash flow, they didn't need to go to Bank of America for a loan.

For the corporate owned ( non franchise stores) They aren't selling THAT many cell phones and accessories ( or whatever) in that one particular store to cover the rent, electricity, phone, wages every month.

escap · February 2007

SevenOneEighty wrote:
Escap, that is simply NOT always true nor accurate.
Yes, that happens but their are other examples as well.
My firm just completed a building in Queens. We designed it, bid it out, performed the construction administration, made the attorney general's filing- the whole process. It is a condo building with retail on the ground floor.

The owner went with a large national drug store chain because they could get the most MONEY from them and they OUTBID the smaller "mom and pops" with cash up front and a HIGHER lease price and longer lease terms. (the space cold have been divided in to 4 different lots for retail). They have a series of packaged formulas, lawyers, real estate agents and marketers that are more streamlined, experienced with negotiation and know how to "get" properties. So that is good for them - but they are a big machine.

Economic Theories are nice, but I do this for a living and I can tell you many other instances in residential/ retail projects: It really IS about the money.

There really IS a reason why there are so many cell phone stores and banks on the UWS and soon 5th and 7th ave in PS. Its not just because their business plans (while theirs definitely made the owners happy) are better....Because of their corporate cash flow, they didn't need to go to Bank of America for a loan.

For the corporate owned ( non franchise stores) They aren't selling THAT many cell phones and accessories ( or whatever) in that one particular store to cover the rent, electricity, phone, wages every month.

My god, why is this concept so hard to understand?? :evil: Why on earth would that national drug store chain have outbid the smaller merchants if it didn't expect to be able to make more money on the site?!!! You think Duane Reade is in the business of losing money? Wow, that's an economic theory for you. ](*,)

Why would those cell phone stores use their rich corporate cash flows to funnel money into unprofitable ventures that couldn't cover their rents? How do you figure that a Verizon store making $5K a month in rent could outbid a wine bar making $10K a month? The wine bar could bid $5,001 and it would be over. Verizon would not use its balance sheet to finance a losing cause (of course it might be mistake, but you don't get to be Verizon by making that many mistakes). And of course there might be down months, but on average it would most definitely expect to be able to cover its rent with profits from that site, and a whole lot more. And btw, have you seen the debt on Verizon's balance sheet? ~$140 billion in liabilities (mostly debt), compared to ~$190 billion in total assets. Your suggestion that they don't "need" to borrow is just completely, utterly false. Also, 2006 operating expenses? $75 billion. 2006 cash balance? $3 billion. Expenses are paid with revenues, not with cash on hand.

I will grant you that in a new development like the one you're describing, a large chain will have an overwhelming edge when it comes to experience, marketing, and all of what you mentioned. But the original topic related to chains kicking out smaller merchants who were already in place, in which scenario the corporation's marketing edge is much less of an issue. And for all the marketing and cash up front (which is mostly borrowed), I guarantee that no company will agree to pay more in rent than it expects to be able to cover in revenues.

If you don't believe this is true, I would question why you think any small businesses exist at all? Instead of Beast, why isn't there an Olive Garden? Instead of that new Korean place, why not a cell phone shop? Instead of Muddy Waters why not a Starbucks? Surely you don't think corporate America ran out of cash just as it reached Brooklyn, do you? Damn, they could outbid mom and pop on Madison Ave but on Vanderbilt they were down to their last penny!! Riiight. Obviously it is market conditions, ie the fit of the business into the area and the expected profitability of the venture, that dictate the lease. The fact of the matter is that Beast can afford to pay a higher rent than Olive Garden, b/c Olive Garden knows it couldn't do any business in the area, not because Beast has a higher cash balance!

Sheesh!!

ben · February 2007

I think it's important to keep in mind that many stores like banks get multiple advantages from these storefronts. For instance, BofA is most likely not making enough in ATM fees to justify the rent they are paying for that storefront. But they are providing a service to their customers so their retention rate may be higher. That plus they may attract additional people to switch to BofA because there is an ATM nearby. And then they are getting advertising that adds value to their brand and may influence people to go to them for a mortgage or some other loan.

So it's very difficult to know what the value is to BofA of that storefront. It is more of a direct expense than a direct profit center but it allows for indirect profits. This makes it very difficult to compare to a mom and pop bakery or whatever.

On the landlord front there are a number of considerations as mentioned. What is the tenants ability to pay the rent, do they have a proven track record, are they a good corporate citizen, etc.? Also what is the impact on the space itself and the neighbors? It is very common that landlords don't want to rent to food related businesses or bars. They can attract vermin, disturb other tenants, etc. A bank is a great tenant from this perspective.

escap · February 2007

Ben, I agree. Still, the point is that the overall revenue generated by those ATMs, both direct and indirect, justify the monthly cost. And I agree that a landlord might have a preference for one type of tenant over another; but it's not always the landlord's decision. If the expected revenues don't justify the asked rent, the tenant will not agree to the deal.

FU - Bank of America

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