Thursday, December 21, 2006

Hello, Bend Inc.

Rising rents in Bends downtown core have been a reality for the last few years. The Bend Bulletin chronicled the demise of Ponderfusion in it's article, Changing face of downtown.

This article points out that no fewer than 4 businesses in downtown Bend are closing (or contemplating it) or moving, primarily due to high rent rates: Ponderfusion, Super Burrito, Kuinshinbo Kitchen, and Double Happiness restaurant. Pegasus bookstore owner, Duncan McGeary states, "I just hope the perception (of how valuable downtown real estate is) doesn't outstrip reality." In his excellent blog, The Best Minimum Wage Job A Guy Ever Had, he chronicles the trials & tribulations of running a downtown Bend business. From the title, you can quickly surmise that he's not in it for the money! Another Bulletin article tells how Apricot Lane is also closing. And business closings are like icebergs: Only 10-20% are really visible. For every Bend business that undergoes a public closing, there are probably several more on the precipice. Today, there comes more proof: From Hack Bend, comes the news Gambit Games is indeed closing. Expect this trend to not just continue, but accelerate.

Craig Glazier, president of DesertScapes, owner of several downtown buildings states:

The rate increases come from a combination of factors, including the rising costs of land downtown, the cost of renovating buildings and competition for a spot in the city center.

"A lot of tenants are struggling to pay new rents," Glazier said. "It's frustrating for tenants, but the landlord has to balance the cost of buildings with rates you can receive and still keep good tenants."

"Balancing" the cost of buildings, really means making money on huge investments. Commercial buildings have no other function than to make their owners money. And with property values doubling & tripling, rents have moved in lock step higher. They seem to be reaching a breaking point. Subpar retailers are dying in droves. That is inevitable, it's just a matter of time for places like that. But many stores that have been here forever are being plowed under. Duncan states it best in his blog:

"Rents look to be getting way too high. I will stake 26 years of experience in downtown Bend to say this: if you rent any space in downtown Bend for 2.50 a foot, (plus triple net, which is the equivelent of another .25 to .75 a foot) it will be extremely difficult for you to make money. Period."

This is the arrival of what I call Bend, Inc. Say goodbye to the little quirky hole-in-the-wall places that could survive on sub $1.00/sf rental rates. For better or worse, Bends downtown is going to go corporate at an increasing rate. Economics demand it. And businesses that are the livelihood of many lifetime Bendites will go away. How this makes people feel about living here is a matter of taste. But it seems that as many people that are attracted by Bend, Inc, an equal or larger number will want nothing to do with it. I count myself among the latter.


Anonymous said...

I also really enjoy Duncans blog.