The Firkin for June 2024

Are building landlords the biggest problem for breweries now and is it more of a problem in higher cost Los Angeles?

When an industry reeling a bit and breweries closing, the first suspects through the door are ingredient and labor costs and / or shrinking customer base.  The former pushes raising the cost of a pint and the latter scares you away from doing that so as not to lose more customers.

But rarely is the cost of the physical space invoked. Is it not an issue?

As I write this, there is an empty apartment in the building next door.  My building has had extended periods without a tenant in one of the four units because my landlord is quite rigorous in her selection process but throughout the fair city of Glendale there is plenty with a capital P office space, plenty of business space in one of the many with a capital M condominiums in town and even quite regular space open at the fancy Americana mall.

It seems a math question of possible future returns vs steady now money.  But the value of a current tenant does not seem to have risen very much if at all while the allure of some dream tenant walking in and paying double as far-fetched as it may or may not be seems to be in vogue.

I do not know how pervasive it is in the Los Angeles rental market for breweries but I have seen it mentioned a fair bit and I saw it play out with the beloved Sunset Beer Co. which was intentionally priced out of their space.  Even though literally across the street was a new and very empty development that was mostly graffiti.  

How does a landlord see that and go, now is the time to look for higher paying tenants? Do they have the cash reserves to pay for a building not getting rented out?  

I know that the stereotype of a landlord is not great even though I have a great one and others do as well.  That perception should lead to landlords differentiating themselves by being really good.  By selecting a business that they can have for the long term and work with so that BOTH succeed.  Why is that not the norm?

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