Real Estate People Don't Think Like the Rest of Us

About ten years ago, I leased an office/warehouse suite in a building that had five other units like mine. The owner was a local commercial broker that decided he wanted to be a landlord as well. At the time there was overcapacity for units like mine, so I had the pick of the litter. Since I wanted to keep my flexibility for future growth, I only signed a one year lease.

At the one year mark, he comes into my office as announces a 7% rent increase. Without a second's thought, I said no. We stood there looking at each other.

Finally, I said, "How can you ask for an increase when half your units are sitting empty." His reply, "That's the reason. I need more income from existing tenants to make up the shortfall."

Hey, I can get greedy sometimes too, but I was simply amazed by his total lack of understanding of the market. Or irony.

The point never sank in even when he got the same reaction from the other two renters.

I didn't want to move, but went ahead and started looking at other locations in case he pressed the point. He never did. And I continued to lease there for the next three years at the same rate.

I drove by the other day, and he now has two tenants. Plus a "For Sale" sign out front.