Wednesday, June 04, 2008

Letter: Development Means Retail Upscales

Steve:

1. Development = Upscaling

This seems self-evident, but a lot of people have trouble pulling the thread on the economics of re-development. Sam Chon bought Glebe Market for $1 (or whatever) and is selling it for $100. The buyer has to do something that will cover the purchase and continue to make a profit. So he seeks greater density (height) and charges new tenant stores more,which soon squeezes out Mom and Pop stores in favor of the chains who can afford the rent. This happens everywhere - you find M+Ps in older and low-rise developments where they could afford to buy; you don't find them
in Times Square.

If you track back, even the advent of the M+P was an upscale redevelopment of what was previously farmland (and no doubt people were despairing of losing THAT). You never see redevelopment of buildings to lower, less dense and retro uses. We all love the old days, and the individual and quirky M+Ps that gave a place character before the homogenizing effects of big money loans driving the developer to the common denominator. But until you can convince people to take a loss when they sell... (Nevermind, that local demand convinced the developer that
there would be a market for Trader Joes or Applebees.)

2. The above notwithstanding, Grand Int'l Mart in 7 Corners and Alexandria
may be the kind of ethnic grocery Buckingham is looking for but at a size
that can sustain the new rents.

If you have any influence with the developer, mention it. Their floorplate is larger than Glebe's, but they may be ready for a smaller application.

Reid Goldstein

The writer is referring to last week's HeraldTrib Today column. --ST

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