Keep Greek tragedy on the stage 🎭

If you’re a regular reader of this newsletter, you’ll know that there’s a solid 50% chance that I’ll have written this on a train, and a 10% chance that I’m going to use one of my favorite podcasts to make a point about real estate. Well, today’s no exception. 

I actually only have three true favorite podcasts. I already wrote Acquired a month ago. The second is about the Murdaugh murders*, and I haven’t yet found a not-completely-inappropriate way to relate that topic to real estate. But the third one continues to deliver gems.

So the moment I listened to episode #2 of The Rest is History’s four-part series on Greek myths, this newsletter was bursting fully-formed like Athena from Zeus’ head. (Now just to set the record straight, myths are obviously not history. The series was really about what the Greek myths tell us about life in ancient Greece.)

Episode #2 discussed the story of Oedipus – you know, king of Thebes who killed his father and married his mother. Right. Well I never read Sophocles’ tragedy Oedipus Rex in high school (probably because I was busy reading the Aeneid in Latin, thank you very much), so I learned A LOT over the course of 66 minutes. 

Three things in particular really stood out:

1. Apparently Oedipus is pronounced EEEEEEdipus. At least that’s how you say it if you’re British.
2. Oedipus’ dad, Laius, got what he deserved so don’t feel bad for him. Google it.
3. Oedipus lived his whole adult life, and then right when he’s busy dealing with a plague, he CSI’s his way into learning that the guy he killed in a road rage incident decades before was actually his biological father, and his wife, the mother of his four kids, was actually his biological mother. HE HAD NO IDEA.
   
   

Things don’t turn out very well for Oedipus and his family after the big reveal, but what makes the story such a truly tragic tragedy is the slow unfolding of Oedipus’ understanding of the truth. The story endures because it hits so hard…because it’s a feeling we all know.

💡 WE DON'T KNOW WHAT WE DON'T KNOW.  And sometimes that has very painful consequences.

This is something that happens a lot in retail real estate — especially to first-timers. The old school CRE system is just not built to ensure that everyone signing a lease has asked all the important questions and sought all the information they might need to protect themselves. 

That’s why you hear exasperated retailers say things like:

• I didn’t know I’d have to pay rent before I finished construction
• I didn’t know the landlord could rent the space two doors over to a competitor
• I didn’t know the landlord could refuse to transfer the lease to the person buying my business 

What makes realizations like these absolutely awful is the shame attached to finding out that it was in the lease all along. Not only was it there for the knowing, but there was a moment in time when it could have been changed. 

There are a zillion unknowns when you’re opening a new retail business, but the lease should never be one of them. Everything is right there in black and white before anyone signs.

There are multiple reasons why it usually takes at least six months to negotiate an LOI and lease. One of the biggies is the main reason leases exist in the first place – the lease anticipates and decides everything that will definitely and might possibly happen during the lease term. The goal is to avoid confusion and/or litigation down the road. 

❗️As you can imagine, there’s a lot to discuss and decide, so if you don’t fully engage in LOI and lease negotiations (either out of impatience or ignorance), you can be certain that every issue will be pre-decided in favor of the landlord.

Negotiations balance the “decisions” and provide a tremendous amount of certainty to a very uncertain future: 

• You don’t know if or when your HVAC unit is going to die, but you know if you’re going to be responsible to pay for it.
• You don’t know if your landlord is going to put a new facade on the building one day and set up scaffolding right in front of your door, but you know that he cannot block your entrance and he has to pay for and install temporary signage for you.
• You don’t know if the bakery next door is going to blow up on TikTok and become the busiest place in town, but you know that the landlord cannot raise your rent.  
  
  

~🏺~

Perhaps if we lived in Ancient Greece, we’d consult the Oracle at Delphi prior to signing a lease, since asking Apollo is probably the best due diligence you can do. But just like the road to a fully negotiated lease, the journey is long and difficult. If Oedipus can walk for three days from Corinth to see the Oracle then trek four days over to Thebes, you can manage six months of emailing.  

 *My dear Murdaugh Murders podcasters (actual journalists) produced the new Hulu series, so it's bound to be good. And sorry for all the familicide in this newsletter.