link to full article:
http://greatergreaterwashington.org/pos ... usinesses/

High rents directly impact businesses by raising the average total cost. Barista wages and coffee prices likely don't waver much from city to city, but the amount a coffee shop pays to its landlord every month can and does vary greatly.

The result is that coffee shops in high-rent neighborhoods, for example, face a challenge that coffee shops in low-rent cities and neighborhoods don't: They have to pay handsomely for the privilege of simply being able to open their doors.

and for data freaks (scroll down a bit)
http://www.bls.gov/oes/current/oes353022.htm#st

Marginal tenants get forced out by rent/lease increases. It's part of the normal order of commercial real estate. A market-based, capitalist system such as ours purges itself of obsolete and poorly run or located businesses. It's mostly a healthy thing; and not remarkable in any easily discernible way.

This isn't to say I don't feel bad for people who get hurt by the march of progress. But that's another thing. The good news, if such there is, might be that someone, somewhere believes the rental value of commercial real property is increasing. More likely, he's deluded and will lose even more money than his former tenants as his buildings sit abandoned and empty. I can't help being cheerful, it's just how I am.

Please don't take this as smart-ass or challenging as it's not meant that way; there isn't any other way to ask. What point are you trying to make?

BDL

That's only part of the equation. Even very successful independent businesses have a hard time getting into major retail and office areas, because the landlords and/or the lenders that finance the landlords insist on deep-pocket chains, known in the industry as "credit tenants." This is a major reason why successful retail districts wind up looking like shopping malls sooner or later.

I'm sure it hasn't escaped anyone's attention that very few of the coffee bars recommended on this forum are located in upscale shopping districts.

boar_d_laze wrote: A market-based, capitalist system such as ours purges itself of obsolete and poorly run or located businesses. It's mostly a healthy thing; and not remarkable in any easily discernible way.

as the value of a property increases, it becomes less and less "rational" to rent it for anything besides making more money. Therefore, it is "irrational" to have cafes when the cost is too high. Eventually, a system that only responds to material interests becomes blind to anything other than making more money, decreasing the quality of life, and becoming "rationally" dull and boring.

boar_d_laze wrote: Please don't take this as smart-ass or challenging as it's not meant that way; there isn't any other way to ask. What point are you trying to make?

BDL

I think I would ask you the same question.

Marshall wrote: ... Even very successful independent businesses have a hard time getting into major retail and office areas, because the landlords and/or the lenders that finance the landlords insist on deep-pocket chains, known in the industry as "credit tenants." This is a major reason why successful retail districts wind up looking like shopping malls sooner or later ... very few of the coffee bars recommended on this forum are located in upscale shopping districts.

But lots of upper middle class people, the demographic for whom these malls and quasi-malls are built, avoid them precisely because of this. Instead they go to gentrifying areas where the independents (and good cafes) can thrive. This, of course, has the perverse consequence of driving up their rents in the mallification zone.

There must be a fortune waiting for any real estate maven who can figure this out (as opposed to just worshipping or execrating free enterprise).

Martin wrote:...and for data freaks (scroll down a bit)
http://www.bls.gov/oes/current/oes353022.htm#st

Holy grinds, we're number one!

States with the highest concentration of jobs and location quotients in this occupation:
State - Employment - Employment per thousand jobs - Location quotient - Hourly mean wage - Annual mean wage
South Dakota 3,660 9.46 2.69 $8.65 $18,000
Rhode Island 3,880 8.67 2.47 $9.44 $19,630
Washington 22,400 8.32 2.37 $9.71 $20,190
Idaho 4,000 6.72 1.91 $8.64 $17,960
Connecticut 9,780 6.12 1.74 $9.62 $20,000

Not that you'd know it from the coffee.

One take-away from the data is that baristas don't make much money. Waiting tables offers a tiny career path for wage labor that can rise above poverty-level income. Not so for that specialist serving up lattes. So tip well.

Another observation is that costs of barista labor, which are both low and uniform across markets, are less likely to determine cafe success or failure than some other market factors mentioned in this thread. So tip well and don't be mean to that kid who doesn't know which end of the button to push.

dialydose wrote:I think I would ask you the same question.

My point was that I didn't get the point and was hoping the OP would explain.

Did you really need the explanation?

BDL

Arpi wrote:as the value of a property increases, it becomes less and less "rational" to rent it for anything besides making more money. Therefore, it is "irrational" to have cafes when the cost is too high. Eventually, a system that only responds to material interests becomes blind to anything other than making more money, decreasing the quality of life, and becoming "rationally" dull and boring.

So, how would you go about keeping things exciting?

Also, I think your underlying assumptions fail since "rationality" is all well and good as a word, but not much of a reality player. Human behavior is frequently irrational, even when lots of money is at stake. If there's one big take away from game theory, it's that the "rational actor" is largely a myth.

Strangely, this is true for organizations as well as individuals. I don't know what kind of law Marshall practices, but if it's business on business litigation, or "bad faith" insurance, he can confirm.

BDL

PS. Not that it matters, but my economics and politics are pretty damn liberal. Put me on more or less the same part of the scale as Krugman, and you wouldn't be far off. Please don't mistake me for a no-tax, no-regulation conservative or libertarian. It would hurt my feelings.