Tuesday, May 02, 2006

A Commercial Rental Story, Part 2

This is the second letter from Mary A. Harris, Previous Owner, Rugmaven.

Last week’s Local contained two items that resonated deeply for me. One was a letter from a local attorney who commented on factors that may be discouraging business owners from setting up shop here, and the other was an article reporting on Bill Sullivan’s keynote address at the annual meeting of the CHBA two weeks ago suggesting that business owners share information in the interest of moving this business district forward as a whole. As a recent retail shop owner with locations in both Chestnut Hill and Manayunk, I feel I am somewhat uniquely qualified to comment on some aspects of doing business in Chestnut Hill, as I have something else to compare it to.

A handful of highly-visible storefront vacancies over the past few years have prompted many to wonder whether the high cost of renting in Chestnut Hill discourages unique retail stores from opening and maintaining a business here. While Manayunk is weathering its own transitions and property issues, the longterm empty spaces owned by Richard Snowden, the former Gap building, and the former Fleet Bank building, at one of Chestnut Hill’s most prominent intersections and owned by an out-of-state landlord, have been a focus here. It is no secret that Chestnut Hill has been preyed upon repeatedly over the years by several well-funded landowners whose primary focus has been to exploit the great opportunity for profits this affluent village provides. Deep pockets and a large real estate portfolio make one or two long-term vacancies relatively easy to absorb if one would benefit more from the tax writeoff rather than rent at a more reasonable “market value”. Sadly, the current stock of buildings in Chestnut Hill is owned, in part, by several folks who espouse this type of “big picture”, or corporate, cost-benefit mentality.

I have personally had encounters with four of the more prominent landlords here, having rented for the past three and a half years from Mr. Sanjiv Jain, a former executive for both the tobacco and fuel industries who has quietly acquired numerous commercial and residential properties over the past several years and, in search of a larger space for my business, attempted to rent three other prominent spaces: First, the small side of the former Gap building, which sat vacant for over two years and was perfect, but was unexpectedly sold to Commerce Bank while I was negotiating terms with its broker, Ms. Lisa Rosenfeldt. Unfortunate, as they were willing to subdivide and had lowered the base rent to an appropriate and affordable $25 per foot, significantly less than the $40 I was paying Mr. Jain for a small space with broken fixtures and a non-working air conditioner directly across the street. Ms. Rosenfeldt was incredibly reasonable and helpful at every turn, but, alas, Commerce appeared and the rest, as you know, is still history in the making.

Next, I pursued Mr. Snowden’s property down the street that previously housed Simply Cottage. Formerly two stores that had been made one, I was pleased to learn that Mr. Snowden was willing to re-subdivide. The cost for the whole approx. 2100 square foot space? Almost $8,000 after including the additional “fees”. Even more shocking was the cost for the sub-divided half space, a whopping $7,000! His agent, Jackie, was gracious and helpful, but during such a tough time for retail, that cost was simply prohibitive to anything other than what it became, a high-volume nail salon/day spa.

My third attempt was, in some ways, the most entertaining. The former Fleet Bank at Highland, was shown by a local architect who didn’t recognize me the second time I came to measure and look at the space (didn’t he wonder how I knew his dog’s name?). It was listed at 2,500 square feet and priced also at approx. $8,000, including triple net fees. I was not surprised when it turned out to be just about 2,000 feet after twice measuring carefully, as almost all the landlords I dealt with inflated their stated square footages significantly. (My recent space at 8611 was originally quoted at approx. 1,000 feet but in actuality measured in at a mere 600 feet. The for-rent sign above the door now says 750 sf.) Dealing with the irascible octogenarian, Mr. Crossett, was an eye-opener. I couldn’t get a word in edgewise while he railed for almost fifteen minutes about how Chestnut Hill has been hostile to chain stores for decades and, as a result, deserves the longterm vacancies it is experiencing (“Chestnut Hill has made its bed, now they can lay in it”. This is an actual quote.), before informing me he wouldn’t be renting to any local business. I deal with all types of older adults daily in my work as a geriatric psychotherapist, but I was no match for this man’s invective or his fixed resentment of “the powers that be” in Chestnut Hill and accepted his polite refusal to rent to me. Wisely, he has since enlisted the professional services of Ms. Lisa Rosenfeldt to represent his space and she has, I am told, been negotiating with a well-established national company that is quite interested in Mr. Crossett’s building.

Discouraged, I put the word out to the Business Association and fellow business owners and found that there are, in fact, several reputable property owners here in Chestnut Hill. You can tell who they are by the lack of turnover in the retail shops that occupy their spaces and the pleasant ways their tenants talk about their “landlords”. Some of your favorite small businesses at the top of the Hill and in the rear parking areas rent from these quality men and women who genuinely love and care about Chestnut Hill. They rent at favorable terms in fair and balanced leases and value the long-term businesses that write them checks month after month, year after year. They keep their properties in good repair and respond quickly and positively to maintenace issues that arise. They don’t seek every opportunity to wiggle out of their responsibilities as landlord and they consider their tenants friends and, therefore, nurture those relationships, taking a symbiotic, rather than parasitic, approach to capitalism. You might not know about these property owners, as their names are conspicuously absent from the current controversies and ethical infractions now plaguing the Hill’s incestuous political groups and lining the pages of the Local this past year. They contribute by actively participating or serving on committees, but their intention to “serve” the community is clearly evident, in that they’re careful not to overstep their bounds by insinuating themselves into a monopolized power structure which might legitimately be construed as a conflict of interest.

After seriously pursuing every reasonable option for a larger space, and unwilling to sign again with a landlord I have come to deeply mistrust after many contentious run-ins over the interpretation of my egregiously tenant-hostile 20 page corporate-style lease, complete with a gag clause forbidding me to say anything negative about Mr. Jain or discuss the terms of my lease for its duration, I decided to close up shop and wait for a space with a less onerous landlord to open up, for I know they do exist here in Chestnut Hill, even if few and far between.

As the only Hill tenant to date, that I am aware of, who has signed a commercial lease and actually stayed the full term with Mr. Jain, I suppose I am in the unique position of commenting on both my experiences during the term of the lease and the smoothness of getting my security deposit back in a timely fashion. Nothing I say here is news to Mr. Jain, as I have taken numerous opportunities to try to awaken him to a less bullying, “profit at any cost” mentality and a more honorable business philosophy in such a small town where we all live and work and where gag clauses eventually expire. His “gift” of letting me use his Yankee Candle space for my liquidation sale and auction notwithstanding, which I am eternally grateful for, materialized only after a very public dressing-down when Mr. Jain reneged on the terms we had agreed upon, literally two days before I was scheduled to take possession, after an irresponsible neighboring business owner used my name while criticizing Mr. Jain’s business practices at a meeting the night before my lease was to be presented to me.

In the end, after paying my rent, and the additional fees outlined in my lease, on time, every month, for three and a half years, I did not receive a penny of the $4000 security deposit refund I was expecting. Rather, I was presented with a carefully justified bill for $9,700. It seems that Mr. Jain had grossly underestimated the additional “CAM” charges and the Use and Occupancy Tax by more than 50% on my lease, citing huge increases in property values and taxes he was unaware of when he drew up the lease. As always, he was quick to point out that I was still legally responsible for the additional fees, despite his failure to provide the annual CAM expense reports and following year estimates that were clearly required by the terms of my lease. Mr. Jain claimed the reports were not provided because his multi-million dollar real estate business lacked a bookkeeper during those few years, but has since hired a very competent woman who was able to gather enough insurance, tax and utility bills to justify the $9,700 balance due. At the openly hostile meeting where this was sprung on me, I was immediately able to find $2500 of accounting errors, in Mr. Jain’s favor of course. Since then I have reviewed the figures a bit more closely and see that I was also overcharged for an additional year of real estate taxes, which would trim another $3300 off the $9,700--a moot point now, since Mr. Jain has generously agreed to waive the ultimate balance due and call it “even” in an attempt to have things end on a more positive note. I’m still working on calling unexpectedly losing a $4000 security deposit due to a landlord’s bad accounting practices “ending on a positive note.”

Dovetailing Mr. Sullivan’s suggestion that we stop keeping secrets, open up the books and get to know “who controls our destiny” in this unique and special business district, I suggest that either the Local or the Business Association do a thorough assessment of the current rental situation on the Hill. Ask landlords and tenants what the real rents are and how ethically and responsibly each are upholding their ends of the contracts. In theory, I suppose the forces of capitalism would eventually weed out onerous landlords as fewer people would be willing to sell properties to them and fewer renters would sign leases with them, but, like evolution, these trends seem to take a long time to actualize and may benefit from a helping hand by well-meaning individuals who wish to make things better for the community as a whole, not just those who seek to exploit it, in the more immediate future. While I can’t, in good conscience, recommend doing business with Mr. Jain, as a commercial landlord at least, I CAN and DO recommend to any business considering setting up shop in Chestnut Hill that you do your homework, research the business practices and reputation of the property owner you’d be dealing with and come enjoy the many kind and interesting consumers this area has been lucky to serve for generations. They’re a terrific bunch and well worth the hassle of persevering to get in the door here. In spite of numerous bad experiences as a retail renter in Chestnut Hill, I absolutely don’t regret doing business here and remain enormously grateful for the all the fun and the valuable lessons learned.


Anonymous Anonymous said...

so shiesty.

find your opponents loop holes, cause they've found their own within the system.

if you can recall i believe either peter mazzacarro or mike mishak were involved with some kind of research into this topic. a local property owner,mr. black read something in the Local and threatened to sue. Big words. Henceforth mr. black can't be whispered in the Local offices.

When a reporter does a good job, it lights fires. And no body likes being burned.

Tue May 02, 07:39:00 PM EDT  

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