“The Rent is Too Damn High”

Many in the know…knew. It was inevitable that not all the restaurants opening on the 7th Street restaurant corridor could survive. Frankly, I thought there were several other eateries on 7th that would close shop before The Herb Box on 7th. I read the reviews on Yelp to help gather insight from customers and it was not pretty. The quality of food may not be the issue but rather the type or lack of service took its toll according to the reviews. I am reminded that it is called a “Hospitality” business. In the eat or be eaten business you have to be on the lookout for all predators.

“The Rent is Too Damn High”

Yes…its a different business model. No, your sales don’t support the rents the developer “needs”. Infill sites are becoming a rare find and demand is high, and some building costs have increased 33% in a short time. How you determine rent all begins with the cost of real estate and properties along our prominent arterials with strong visibility and parking can be costly. The Colony is a good example. The developer paid a market price to purchase the property. The success of The Yard started the stampede on 7th street. He took on the task to redeveloped the project and committed to his internal return on investment scenario. He went to market with a creative vision to reposition the property. I think he did a great job with the project. Demand for space was high and phase I leased up very quickly with local contemporary restaurant offerings and no chains. As most good developers know, the restaurant industry is highly competitive and the risk is greater in this retail category. But with high risk can come high reward and the Colony filled up quite quickly with local known names and concepts weighing the risk with entrepreneurial spirit before signing long-term leases. Many (not in the know) blame the “greedy” developer for charging high rents and that is how we get to the “rent is too damn high” syndrome and the only reason the restaurant failed.

From what I experienced and what I read, service at the Herb Box (or the lack of) contributed to it’s demise. Competition played its part, culling the herd of those with empty seats along the foodie corridor. They will surely find a replacement tenant (bet you 10 to 1 it’s a restaurant), another “local restaurant” willing to ply Phoenix’s 7th St food corridor.

 

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