Main Street Gone Bad

I live in a suburb of NYC. The population of our town is about 17K.

We have a downtown area….that is mostly vacant.

2 landlords are the key holders of these empty storefronts. It is now impossible for the middle class to shell out to rent one of these storefronts and open a business.

The only people who are doing so: the ones that already own a business.

 And even then….

Exhibits A and B: Builder’s permits are emblazoned on the front windows of 2 of these storefronts.  Those permits have been in the windows for over 3 months. There is no activity taking place on the inside.

One of these no show businessesstill touts a bedraggled and now faded sign in the window; the sign proclaims “Coming Soon…Deli!”

Exhibit B was probably going to be a florist. Like I said no activity there.

Exhibit C: a new restaurant opened….that was in April.  A sign now sits in that window: “Renovations In Progress”.  The business is closed, whilst these “renovations” take place.

Renovations??? Cheez, the business just opened! There were renovations before the eatery opened in April.

I am willing to bet that the business has changed hands and somebody new wants a new kind of eatery…. or the current business operator has simply left the scene.

Exhbit D: A sign recently appeared in another store front window: it’s a dry cleaner.  That dry cleaner has not gone live yet.

Exhibit E: “Fred’s Bar and Grill”: That too, is changing hands.  The prior owner operated the restaurant for about a year and a half.

Exhibit F: It’s a kid’s craft center and craft sales. They seem to be holding their own.  Been open about a year and a half.

We have a video game store that went under, a dollar store that didn’t make the cut, and a liquor store that was thriving up until about 2 years ago. That storefront sits vacant, too — and about 50 feet from there was a pretty good bar and resturant that was doing good business… it closed about a year and a half ago. Nobody is willing to step up and rent the building and open a new restaurant.

You can’t blame the no show florist and the no show deli on the 2 slumlords that own the buildings.  These people changed their minds; who knows why?

This is all another case of “As Goes Main Street.”

Then again, you wonder. About 5 miles from here is another Main Street: they know their clientele: Central and South Americans and Cubans and other Hispanic island clientele. There are dozens of music stores that cater to that demographic (they’re not big on downloads, that bunch), eateries that specialize in Central and South American cuisine, dozens of money wire stores, job training centers, junky clothing stores, discount hardware stores and the like. Business is booming; very few storefronts are vacant.

There are also a few chain shoestores and other chain stores thrown in: Radio Shack. Chain drug stores, Dunkin Donuts and well known fast food eateries.  Business is booming there, too.

Maybe it is all a case of “sell what you know.” Maybe it’s a case of too high rent making the cost of operating a business prohibitive to people like you and me. Who knows?

9 thoughts on “Main Street Gone Bad”

  1. Suppose that I wanted to rent one of those storefronts. I’d want to have at least a year of operating expenses, to include the cost of goods that I expected to need to buy for my initial stock, in the bank. This could easily exceed $100K. I’d also have to want to live in that town and want to deal with the people who would be my customers. Very few consumption-based businesses that are not commodity goods can be started without a physical storefront, and you have to be prepared to pay the start-up costs of the business, which goes beyond first and last month’s rent and security and utility deposits. There are also insurance and business licenses to be considered.

    People need to feel adequately compensated for risk. If I’d seen several different stores of the type that I wanted to open fail at that location, I’d look for another location. This may be the answer to why no one is renting in that strip mall, but I believe that a big part of it is not having the capital saved to make a go of a business in that location or any other location. The 3-5% fee that banks demand for cash advances on credit cards may be enough to squash a business’s prospects. We’ve had single-digit to negative saving rates for decades, and current interest rates just punish savers. The spread between what savers get in interest and what is charged on credit cards is around 15%.

    I believe that we will see more and more small businesses that are peddlers or that advertise and don’t have a store to which you can go. The important thing for a new business is to keep their operating expenses to a minimum, and one way to do that is to avoid paying rent. This cuts out the opportunity for walk-in business or other impulse buys, but it does avoid a big expense in the form of rent and insurance on the rented space.

  2. The problem in your town, Dude, is that there are no longer enough people wanting to make a community to support its downtown area. You do not live in one town with a population of 17k: you live in four towns, each of ~4k, and none of the inhabitants of any of these towns wants much to do with the others.

    There are oodles of reasons why starting a business is really hard. One is availability of capital. Even though my business is generally profitable, whenever I’ve approached the bank for a loan, I’ve been turned down flat. I accept that whatever I do will have to be financed out of the till. I suspect that, to maintain the fiction that interest rates properly belong around zero, banks will only lend to really stable borrowers, or the government. Someone trying to run a business that is generally profitable, but with some measure of risk, gets zilch, because raising interest rates to reflect the risk, which is what banks do in normal times, would break the illusion.

    But a bigger reason is that running a business is something that almost none of us learned about in school. I remember some really old math books from when I was a kid that discussed math for business: credits and debits, balancing a checking account, etc. But the teachers never taught from that part of the book. There’s even less about the other skills of running a business: customer service, reviewing and negotiating contracts, identifying and complying with licensing requirements, making decisions about sites, employees, etc. I’ve been to college, and I like to believe that I’m a knowledgeable person, but there were still surprises when I went into business for myself.

  3. My guess is that those stores will be empty for good. It’s just too expensive for anybody who wants to set up shop.

    (and when ethnic owners sell a business, you know who they sell it to: somebody from the same ethnic background)

    I had a cousin whose job got outsourced 13 years ago. She used part of her severance money to set up a computer cafe/learning center/web-based company.

    She poured a l ot of money into it. I believe that her big drawback was the business’ location: it was on a very out of the way street and you literally had to dig to find it. It was one of those streets in a suburb where you’ll find a little grocery store, a very small bar, a pizza place and a tiny bookstore.

    Too bad there wasn’t some way she and the other businesses on that block could collaberate….there is a bar and grill in our town that did exactly that: they bought food from the deli/bakery accross the street. The bar would buy desserts and other items that the chep staff at the bar and grill could not provide/bake/make — it was hugely successful (“desserts by Sarabella’s”) and then the bar was sold to somebody else.

    The new owner was not interested in the partnership with the deli anymore.

  4. I hit “Submit comment” too quickly — my cousin’s business lasted about a year and then it folded up. I’m pretty sure location had everything to do with it. The out of the way area tucked away in a neighborhood didn’t help her at all.

  5. At least the town I live in has this attitude that you buy from people in town. Then again I am talking a population probably around 3,385 (got from Wikipedia)and 97.93% white and the rest mostly Hispanic (this is growing though). There is one black family in town and that is it (they own a farm I believe). Anyway people here at least the older residents (as in lived here longer)believe you shop in town even if it costs more. However many companies have closed because it is hard to just sell to town residents. We have one restaurant in town that people avoid because the food is horrible so I’m sure the few customers they have are those driving by to go farther south. Even the pet food shop guy (this is the guy I lust after)has said he’s breaking even and at times has to rely on his mom’s social security check to pay the bills. Since I have been here I have seen several restaurants, 2 video stores, and several other companies go bellyup. Others survive but mostly because they have a service that is in demand.

  6. Admin, I believe that a bank would prefer that you borrow at credit card rates with the cash advance fee, the combination of which can drive the interest rate that you will pay to nearly 20% if you have a credit card issued after 2008. Most banks hiked credit card interest rates in 2009 in anticipation of the CARD Act. A 3-4% fee works out to much higher than that as an APR because even if you pay off the credit card the next day, you’re still out the fee.

    Have you tried the Small Business Administration for loans?

  7. Of course the bank would prefer that I borrow money from my credit card at 20+% APR. But unless one has a spectacular credit rating, one cannot borrow more than, say, $20k that way: certainly not enough support any meaningful business.

    My business is able to function without bank credit but cannot expand. (Employees need to be paid on payday–no excuses–while clients pay 30-45 days after being invoiced.) But expansion is more than getting a loan: I have to identify candidates, hire them, and bring them up to speed on what I need them to do. (I’ll try not to be a little Napoleon like some of the characters that NWP and Dude have reported on.) Right now I’m running myself ragged trying to address today’s deliverables and don’t have time to do that.

  8. Impossible to rent here in this town. The rents are off the wall.

    Unless you and 2 other people split the rent and each of you do your own thing inside the rental space. This way, the rent is a lot more feasible.

    I could see a florist, gift basket shop and candy store, operating out of the same store.

    If you want to open your own business, you’re better off going into a business that entails no inventory at start up. The business I’m thinking of operating is one of them.

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