Many small businesses rent the property they use, but how
many really understand the implications of who owns the property? Do you?
I am aware of two adjacent retail complexes in the same city
that have very different ownership issues. In one complex (called “A”) consisting
of retail and office space one person owns all the rental units. In the second
complex (called “B”), each unit is individually owned, consists of retail,
office and residential units and operates as a condominium. Which of these models would you think is
better for the tenant business? After all, the goal of the retail space owner
is to maximize income from the space in either model.
Both models have unified rental policies for their complex,
“A” because one person owns them all; “B” because there is one condo board that
creates general guidelines for unit owners.
“A” gives a prospective retail tenant space options that are
or may become available, sets the rent and attempts to insure compatibility
among the tenants. The unit owner in “B” attempts to hold on to a prospective
retail tenant for his unit only, has
to compete with other units in the complex for rent, and does not pay much
attention to compatibility among others in the complex. All this makes movement
from space to space and landlord to landlord a way of life in “B”.
“A” makes sure the tenants understand the “rules”. “B” hopes
the unit owners pass the “rules” on to the retail tenant, leading to potential
confusion at best. Legal issues and closed businesses are also a result. In
this case it is up to the prospective tenant to seek out the “rules” in advance
and stay on top of them over time.
“A” operates like a monopoly within it’s complex, “B” is a competitive
market within it’s complex.
When the economy is tough, both complexes have space
available.
Which is better for your business?
Steve Koenig, SCORE Counselor
Visit us at: www.scoresouthflorida.net
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