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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: John Vosilla who wrote (50449)5/3/2006 12:05:26 AM
From: shades  Read Replies (1) of 116555
 
Talked to a guy last week who owns a couple of Quiznos fast food sandwich shops. His CAM( common area maintenance) pass through on his commercial lease is up 150% from three years ago.

Now this guy may be new to business - but you would think quiznos would be wise enough when they sell him the franchise to have good lawyers who protected him from this - why buy the franchise if you don't get good access to the borgs knowledge in everything from leases to lawyers to marketing?

In recent deals I have seen many of the larger commercial tenants that made sure NO expense could go up NEARLY that much - NO WAY!

In the late 90's I saw many small to midsized towns receiving lots of non-local investment money - they would buy out the local commercial spaces and start these CAM increases trying to milk the small local merchants - in most cases the little guys moved a corner or 2 down the street (even if they had been in that location 20 years or longer) and the whole area they left would die - the non-local investors would go broke - some local guy come back and buy it for much cheaper than what he sold it to the dumb investors for and the local merchants would move back into thier old locations sometimes at the same or cheaper expenses than when they left them! There was this guy named Wayne Reeves in Macon - he loved it when some Yankee finance or investor guy would call for some "opportunity" to make some returns - he would call all his redneck buddies and say guys - the bud is one me TONIGHT - we got another yankee WHALE wanting to give us some more FREE MONEY - long live the confederacy! HAHA! Notice all the people freaking out about investing in south america as things go NATIONALIZED - HAHA! Vosilla - If I am not friends with the judge or the local city councilmen - I would be more leary of investing in things I can't see.

His energy and transportation costs also up significantly. Talked to someone affiliated with a software company being forced to move as the new landlord who payed top dollar for the office building is raising the rent up to 50% in order to justify his purchase. Eventually the consumer pays for all these increase.

This may play out like I saw in the 90's - the new landlord will go broke - the guy he bought it from will come back pennies on the dollar - wash rinse repeat! HAHA! This is just what the big banks seem to do but on a smaller scale in smaller cycles.
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