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The death of the brick and mortar toy store

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Re: The death of the brick and mortar toy store

#171

Post by datakan »

SoftTalker wrote: post #169
kurttheviking wrote: post #6

I own a reasonably well performing indie bookstore. I've noticed for the model to work you need a critical mass of other local shops clustered to make the trip an experience for families and diverse tastes. My working theory is that three of such small businesses are sufficient and could operate well with a common inventory strategy and manager (e.g. a bookstore, a toy store, and a tea or candy shop...nothing that sp…

> a bookstore, a toy store, and a tea or candy shop This was Borders and B&N, in their prime. A one stop shop. They had a childrens area with books and toys. They had a coffee bar. And of course books.

They still do where I live. Its rather nice but seems to be rotting a bit as every time I go there the kids section is clearly not cleaned or well maintained.

Re: The death of the brick and mortar toy store

#172

Post by com2kid »

sjducb wrote: post #96
pif wrote: post #77

Earlier quoted context omitted.

> devastating for someone with a loan Sorry, I can't understand why. Could you please expand a bit? I don't get how decreasing the value of the building makes the loan more difficult to repay.

Loan to Value (LTV) is a percentage that tells you how safe a loan is. You divide the amount of the loan by the value of the building. So if I buy a building for 10 million with a 6 million loan and 4 million of my own money then I have an LTV of 60%. This means if I go bankrupt then the bank can sell the building and get its money back. If the value of the building halves because the rent halved then I have a 6 mill…

Sounds like a solution would be to average rent prices over some period of time to account for rental market fluctuations.

Re: The death of the brick and mortar toy store

#173

Post by com2kid »

bluGill wrote: post #115
wvbdmp wrote: post #87

Earlier quoted context omitted.

I see this also, but I don’t get it. An empty building still costs a bunch of taxes and upkeep and still rapidly deteriorates without tenants looking after it. Aren’t these people hemorrhaging money? What do they have to show for it? My city actually handled a majority of the rent so a business could revitalize a large-ish property that had been empty for years. Of course it failed as soon as that deal ran out.

As I've said elsewhere, when the economy improves it will be rented again.

Except we have the entire commerical business districts of small and mid sized cities destroyed from these practices and there is often no bouncing back from that. Oops.

Re: The death of the brick and mortar toy store

#174

Post by jaccola »

emehex wrote: post #163
Andy_Donner wrote: post #101

My grandmother used to take me to Toys R Us for my birthday every year for exactly this reason — she didn't want to guess what I wanted, she wanted to watch me choose. Walking around that store and seeing what the toys looked like in person was something I looked forward to for days. You can't recreate that with an Amazon wishlist.

I still do this for my dog every year on his birthday. Funny that the Pet Store survived the Internet while the Toy Store did not...

I do the same!

I’d guess one reason is that there has been no iPad/App Store/YouTube invented for dogs…

I have a gut feeling there will be negative consequences for how much time developing minds spend consuming but in the absence of clear cut evidence it seems to be the default.

Re: The death of the brick and mortar toy store

#175

Post by avidiax »

andrepd wrote: post #78
bombcar wrote: post #13

Earlier quoted context omitted.

The thing I've noticed is that even dying downtowns want insane amounts of rent; I think you have to be able to buy the building to make it work. However, that's not as unrealistic as it may seem, because the city itself often owns a decent amount of downtown, and can make a deal.

A Georgist LVT would fix that is short order. Start making owners pay compensation for keeping a valuable space empty and crumbling, and you'll see them step to it pretty quickly or sell it to someone who does.

Though I am pro-LVT, I don't think this will help in the current situation.

The owner, the bank, and the city all wish to maintain the illusion that a $10M building from 2010 is still worth at least $10M today, even vacant. No party wishes to realize the loss in value. Occasionally, the city may try to punish vacancy with a tax, which is still about additional revenue and not about realizing diminished value.

Re: The death of the brick and mortar toy store

#176

Post by SoftTalker »

QuantumNoodle wrote: post #122
bombcar wrote: post #13

Earlier quoted context omitted.

The thing I've noticed is that even dying downtowns want insane amounts of rent; I think you have to be able to buy the building to make it work. However, that's not as unrealistic as it may seem, because the city itself often owns a decent amount of downtown, and can make a deal.

High commercial rent affects not only diverse businesses (good ideas that take risks) but also the quality and accessibility of goods of necessary businesses. Near me, simple mens' haircuts have soared to $35+... Except those shops that have been around for ages and own their buildings. They still charge sub $20. Another gripe is the amount of "luxury" apartments popping up. Inviting & modern interiors but all faux c…

A good haircut takes about 30 minutes. So if the barber is getting $20/cut that's $40/hr gross max assuming he's booked solid every day (most are not). From that they have to cover the rent (or property tax, insurance, and upkeep if they own the shop), utilities, scissors/clippers and other instruments, consumables, their own self-employment tax, health insurance, and retirement. That doesn't sound like it would leave much.

Re: The death of the brick and mortar toy store

#177

Post by [deleted] »

marcus_holmes wrote: post #49
armenarmen wrote: post #48

Earlier quoted context omitted.

AFAIK Commercial is priced at a multiple of rent. So when an owner still has a loan on a building that was based off of multiple of 3000/mo and decides to rent it out for 1500/mo it effectively cuts the value of that building in half. Just an accounting issue for someone who owns it out right, but devastating for someone with a loan. I think this is why you’re seeing landlords offering multiple free months of rent no…

We had this experience with a local town centre where the high street basically died. Retailers priced out by high rents, which was fine when the economy was good and people were spending, but as soon as it took a dip there was nowhere to go and they had to shut up shop. And this mechanism was why; almost all the real estate was owned by funds and leveraged. Property values based on a multiplier of rent. They could w…

[deleted]

Re: The death of the brick and mortar toy store

#178

Post by IAmBroom »

TheOtherHobbes wrote: post #138
bluGill wrote: post #115

Earlier quoted context omitted.

As I've said elsewhere, when the economy improves it will be rented again.

If. And for how much? The system is a formalised version of "Don't tell the Tsar bad news." Everyone has to pretend Better Days Will Come™ while the economy saws through the branch it's sitting on. It works until suddenly it doesn't, and the banks demand a bailout.

So what is your solution that is impervious to a permanent or lengthy and gigantic downturn in the economy?

Re: The death of the brick and mortar toy store

#179

Post by petsfed »

bluGill wrote: post #110
sjducb wrote: post #96

Earlier quoted context omitted.

Loan to Value (LTV) is a percentage that tells you how safe a loan is. You divide the amount of the loan by the value of the building. So if I buy a building for 10 million with a 6 million loan and 4 million of my own money then I have an LTV of 60%. This means if I go bankrupt then the bank can sell the building and get its money back. If the value of the building halves because the rent halved then I have a 6 mill…

Don't forget that long term the current downturn is likely to end and so I will again be able to get the rent in a few years if I can just hold on for these bad years.

... which sort of assumes that the global downturn and the local downturn are completely unrelated.

Like, if a rent hike pushes out the tenant who has been there the longest, who has the most consistent revenue stream, in other words is the surest bet, then that, all by its lonesome, should be a pretty clear risk indicator to the bank.

Re: The death of the brick and mortar toy store

#180

Post by nothercastle »

coldtea wrote: post #75
armenarmen wrote: post #48

Earlier quoted context omitted.

AFAIK Commercial is priced at a multiple of rent. So when an owner still has a loan on a building that was based off of multiple of 3000/mo and decides to rent it out for 1500/mo it effectively cuts the value of that building in half. Just an accounting issue for someone who owns it out right, but devastating for someone with a loan. I think this is why you’re seeing landlords offering multiple free months of rent no…

> AFAIK Commercial is priced at a multiple of rent. So when an owner still has a loan on a building that was based off of multiple of 3000/mo and decides to rent it out for 1500/mo it effectively cuts the value of that building in half. Well, if the town is dying, the "value of that building" is effectively cut in half, or worse, anyway. Asking a lot for rent is not gonna magically make the building worth more - it w…

Accounting rules allow you to extend and pretend which is common in commercial. Because loans are sucuritized by other assets there can be a lot of different assets that could all suddenly become distressed just by pricing down rent in one building
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