AboutMike Fortunato Expertise Can answer questions on all aspects of commercial real estate management, including lease administration, eviction issues, financial reporting and budgeting, asset valuation/enhancement, marketing & leasing, and site maintenance and repairs. 20+ years of real estate management.
Experience 20+ years in commercial management. Current own and operate property management company in southern California.
Question I have been working diligently to open a retail dollar store and found some great locations to lease. But to my surprise and disappointment, the landlords refuse to offer me a lease, stating that a small dollar store might bring down the value of the shopping plaza, or they would prefer to have a national retailer in the space, or maybe just a different type of business. They don't even have another prospective tenant yet, but prefer to leave it vacant rather than rent to me. Isn't this discrimination. I am more than qualified, but they seemingly just don't want my money. This has occurred in the 3 major plazas in my town, and I am at wits end. I can go into smaller plazas in less than ideal locations, but they have much less traffic and will limit my revenues. I could understand if another tenant with a similar business had an exclusivity clause to limit competition, but that's not the case. There are other small businesses in these plazas such as dry cleaners, mexican food, beauty supplies, and others without national names, I just don't understand why I am being shut out? Do I have any recourse?
Answer Unfortunately, you probably don't have any recourse. Commercial landlords can, and often do, carefully select which tenants they want in their centers. Most of the time, the goal is to create synergy amongst the tenants, and some uses are found to be counter productive to that goal. Dollar stores are often rejected for that very reason, especially independents, in favor of more recognizable brands. Usually, the store sizes are rather large, and landlords prefer reputable and recognizable anchors. Also, many dollar store operators are somewhat lax in the way they operate their businesses, which can degrade the shopping center as a whole. Further, dollar stores tend to sell a huge variety of different items, which can conflict with the offerings of other businesses at the center (often at a much lower price).
So, I'm afraid there's not much you can do, other than keep applying to centers where you feel you'll be successful. One thing that might help is to have a formal, professional business plan ready to submit concurrent with your application to give support that you intend to operate a good and profitable business.
