Rent Is Killing Lake Charles
I don’t know what happened with McAlister’s Deli on Prien Lake Road, but according to the sign posted on its door, they closed down because the rent went up. Because this is Lake Charles, and of course it did.
(I’ve touched on this subject before, which you should totally go read if you haven’t yet. Don’t worry, I’ll wait for you.)
Back? Great! If you actually clicked that link, you’ll know that last article was about soaring residential rent prices vs. diminishing salaries. It’s a real problem in the area, and it doesn’t look like it’s going to get fixed any time soon.
But is the same trend that’s happening with residential rental properties also going on with commercial real estate?
The long answer to that question has some boring numbers in it, but the short answer is yup. Sure is.
Now for the numbers. (Don’t worry; I’ll keep it short.)
According to LoopNet – the most heavily trafficked commercial real estate marketplace – the Retail Property Asking Price went from under $100/sq. foot in 2013 to over $130 in 2016, which is around a 32% increase.
Office Property Asking Price also went up, although not as much. Climbing from a low of $88/sq. foot in 2013 to around $103 in 2016, it only went up by about 17%.
Commercial rent prices are harder to find, but I think it’s safe to infer that commercial properties selling for more means they’re renting for more, as well.
Okay, that’s it for the numbers. See? That wasn’t so bad.
So what do soaring housing costs along with a limited and underpaying job market have to do with rising prices in commercial real estate? Well, everything.
It’s how you choke the life out of a city that should be thriving.
When you pay people just enough to where they can barely cover rent, then they can’t afford to go out and spend all the disposable income no one has. Instead, people stay home and eat Pop-Tarts and unmeltable dollar store cheese rather than go out and buy sandwiches and iced tea from places like McAlister’s.
Which is probably tolerable for smaller chains (like McAlister’s), since they can typically absorb some of the loss of business better than small, independent shops can. But when their rent suddenly shoots up, too? Well, it’s just too much. Eventually the back of even the strongest camel breaks.
And it’s going to straight up murder local businesses.
Ask yourself why small, local stores aren’t opening up shop in any of the new buildings being constructed in the South end of town. Could it be because only big, national chains can afford the price of the new developments?
If McAlister’s sign is telling the whole story, then that same real estate greed is trickling down to existing properties in older parts of town, which is going to mean that a lot of small chains and virtually every independent local business will be hit, which will, in turn, drive up prices in the short term and lead to a lot more closed stores in the long run.
For example, a lot of local restaurants are cheap. The food is great, and the prices are reasonable. But when their leases are up and their rent suddenly spikes, how are they going to make up for the 30% loss in profit?
By charging more, of course. Which might keep them afloat for a little while, but remember that people are barely scraping by already. Everyone’s being gouged on rent, and the only time people can afford to go out to eat is when they know of a great local place with reasonable prices, or I dunno, they get a 2-for-1 coupon to Chain Steakhouse #37 in the mail. Whatever.
The point is that higher prices will mean fewer customers, which will mean even lower profits, which will eventually lead to a lot of closed businesses, until all of the great local shops we have in this town have been replaced by national chains selling overpriced junk.
Lake Charles will get hit first, but it will spread to the whole lake area, unless something changes. If things go on like this, then ten years from now, the quirky, fun city I just moved to will become another Anytown, USA, with boarded-up storefronts and a McWhatever’s on every corner.
And that’s the good scenario. The bad – and more likely – one involves total financial collapse once all the short term growth is over, and another mega plant doesn’t come to town with the promise of new jobs.
Which is what the short term greed of a few people always does to everyone else in the long term. Just look at what happened to Flint, Michigan.
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I wish there was something we could do to right the ship, and help correct the course some people in this city seem determined to take us down, but we’re just a radio station, after all. We play music and make jokes, and just try to make sure everyone’s having a good time. We’re basically just the band that keeps playing as the Titanic sinks. We’re not really agents for social change or anything.
That’s up to you guys.
But hey, at least our prices will never go up. Radio will always be free.