It's still vacant...won't the landlord lower the price? 🤔

Dear Pedal,

There is a space in my neighborhood that has been vacant for, no joke, probably four years at this point. Definitely since before the pandemic. Season after season I watch the “For Lease” signs in the window fade and age, and it doesn’t look like there’s anything happening.

So, my question is this – why wouldn’t the landlord lower the rent to make the space attractive rather than just let it continue to sit vacant? It is seriously killing me… this space could be the home to some awesome local business instead of the nothing/ eyesore it currently is.

Yours truly,

Thoughtful Neighbor

Well, hi, Neighbor, and thanks for your excellent question. Here at Pedal, we get different versions of that question a lot. It is so painful to watch a space in your neighborhood sit empty year after year, and it’s easy to assume you’ve got a Scrooge McDuck situation on your hands (aka a greedy or out-of-touch landlord who won’t accept less $$$ than some too-expensive rent number he has in his head).

There are actually many reasons a space may sit vacant, and the rent is just one of them. It’s not even the most common reason, so let’s consider some of the other reasons a space may be sitting on the market.

🦆 Maybe there actually are deals working

When you’re at the duck pond and see a serene squad of mallards floating peacefully in the sunlight, it’s easy to forget that underneath the water, they’re kicking their little webbed feet like crazy. Vacant retail spaces are like that too.

Remember, it takes months, sometimes years, to rent a space, and during most of that time, the work is happening where the neighborhood can’t see it – on far off computer screens. What’s more, not all deals come to fruition. For all you know, the landlord has taken multiple deals (at an agreeable rent) to the finish line only to have them die at the eleventh hour. Could that explain a multiple year vacancy? You bet.

🗑 Even free space can’t fix a fatal flaw

In my life before Pedal, I represented a lot of landlords. From time to time I had to work on trying to lease total clunkers, and I learned the hard way that there was no rent number low enough to make a quality tenant consider those spaces. There are all kinds of fatal flaws that turn otherwise attractive spaces into retail rejects  — a hidden storefront, bad parking, a huge bank vault in the middle of the space that would cost a million dollars to relocate, paranormal activity…I’ve seen it all. Okay, not the ghosts. Yet.

So even if a landlord is willing to give away one of these spaces essentially for free, it’s still not worth it for a tenant to invest time, effort, and a lot of money into a space that hamstrings them from the start. 

🤡 The interested tenant prospects aren’t qualified

Retail landlords can be picky about who they rent to – remember, they’re signing up for a multi-year relationship with this business owner. A lot of the time they’re also committing hundreds of thousands of dollars towards a buildout. If a landlord can’t get confident in a tenant’s ability to operate successfully over the long term, they may well determine it’s better to leave the space vacant than deal with the headache of a bad tenant. 

After all that…what if it really is the rent?

Frankly, my dear Neighbor, most of the time when a space is chronically vacant, the rent isn’t the driving factor… but, that’s not to say it never is. There are some landlords who would rather hold out for the number they have in their head than make a deal with a good tenant.

When this is the case, the best defense is a Powerhouse Business Plan complete with financial projections. This shows the landlord how great you and your concept are and how much rent you can afford. Add on a great retail broker who can call on their comps and supernatural powers of persuasion, and you’ve got a compelling package.