moral question

[louie12]

i own with my family a shopping center,which has a cvs pharamcy plus other small storess.the lease on the cvs store is going to expir within a few years.my brothers and family suggesting that we approach cvs with an offer.the offer is to take the whole property. and if they do it means that we have to let the other stores(pops and moms)go after thier lease expires.is thier a moral problem doing that? since some of thoes store been there for a while and they invested money in the place.the reason we want to keep cvs because the new stores, want their own free standing building.
thank you

 

[fermat]

I don’t think so. As long as you are not trying to be mean or malicious, there is nothing wrong. You may attempt to make a charitable offer to the current owners, but at the end of the day, this sounds like a reasonable business proposal.

You should give them as much time as you can after the deal is signed and help them relocate.

I would also add, that this should not be driven by greed. If your sole purpose is to amass power and money, then there could be an issue. If this is a logical next step in the normal course of business, then that is another story.

 

[John21652]

i own with my family a shopping center,which has a cvs pharamcy plus other small storess.the lease on the cvs store is going to expir within a few years.my brothers and family suggesting that we approach cvs with an offer.the offer is to take the whole property. and if they do it means that we have to let the other stores(pops and moms)go after thier lease expires.is thier a moral problem doing that? since some of thoes store been there for a while and they invested money in the place.the reason we want to keep cvs because the new stores, want their own free standing building.
thank you

Of course, a lot depends on the contracts you have in place with your tenants. However, without seeing them, what you write suggests that your mom and dad leasees have an equitable interest in your building. I say that because you say they have spent their own money in the place. Legally, you might be able to say “tough luck” and they lose the money they have invested in the place when their leases expire. However, it might not be very fair, will it? Maybe they should be recompensed for what they have spent on the place.

Another point comes to mind: these so called moms and pops will obviously have built up a clientelle in the area around your shopping centre. If they are forced to move away, will they lose their client base? The client base is what gives their businesses value, as well as income. If they have to move away, their businesses will be almost worthless, unless they can relocate very close to where they are now. If some of those “moms and pops” are getting on in years, it will be very hard for them to start again.

If you have “moms and pops” forming the bulk of your tenants, and they are really fairly small operators, there will be a sense of community around the place, centred on your shopping centre. Moving the moms and pops out will destroy that and all the community will have left is one more large chain pharmacy. Is it worth it? The pharmacy may very well want to own the entire building, but surely, if the pharmacy outlet is successful, it is because their is that sense of community surrounding the place.

Some times, when we chase the quick buck, we give up a whole lot of other things that it’s hard to put a price on, like the loyalty of your tenants and the sense of community around a place.

Is it possible to ask your tenants if they want to buy shares in the building, or even buy the whole place? You get your money and they get to actually own something in the neighbourhood where their customers are.

 

[JRKH]

Another factor to consider is how much “synergy” there is between the CVS and the other stores. Often times a single store that is successful brings business to other stores that could/would be lost if the “anchor” store moves.
For instance, a small restaurant is in business because many people stop by because they are already there - shopping at the anchor store. If the anchor store moves…the restaurant loses business and has to close.
So - simply denying an extended lease to CVS may not be a solution as they may simply move and that might not benefit anyone either.

As can be seen from the various posts…this is not an easy decision. The best advice is to pray on the matter and try to be as fair as possible to everyone.

Peace
James

 

[1ke]

There is no guarantee when you are leasing. The stores should not have an expectation that they will be there “forever”.

You could certainly make provisions for them in any sale, such as a lease-back for the current tenants for X period of time. That will give them time to make other arrangements. But you are not required to do so.

Properties go up for sale all the time. Those renting on that property understand that these things might happen.

I don’t see how this is a moral issue. You own the property.

 

[Newbie2]

There is no guarantee when you are leasing. The stores should not have an expectation that they will be there “forever”.

You could certainly make provisions for them in any sale, such as a lease-back for the current tenants for X period of time. That will give them time to make other arrangements. But you are not required to do so.

Properties go up for sale all the time. Those renting on that property understand that these things might happen.

I don’t see how this is a moral issue. You own the property.

Some businesses run on their location; move, they lose business, and pretty soon they are no longer in business. The fact that properties get sold all the time does not automatically make such business decisions non-moral decisions.

Rather, the intent of the OP is crucial. If he were to say, too bad for them, and not even try to figure out a deal whereby other tenants would at least have a chance to stay put, such would IMHO be immoral. Inaction can be as immoral as action.

That being said, perhaps the OP can look into converting into a business condo arrangement, where the tenants buy into the property. I doubt that CVS would likely be interested in buying up the entire property. If they decided to move or close the store, they are stuck with the property, and CVS isn’t in the landlord business. Another factor is that CVS stores are usually a standard size, and they likely wouldn’t be expanding their square footage.

I think the morally correct thing to do would be to approach CVS, if that is what you decide to do, with the intent of helping to preserve the currrent tenants occupancy.

Bottom line, though, is that I doubt very much that you have anything to worry about. I’d be very surprised if CVS were interested in buying the entire property.

Look into the business condo arrangement. It might be a good option if do-able in your situation.