What had been obvious for a long time about Radio Shack — with less and less merchandise in the store — was that the end was near. This week, Radio Shack in Malibu finally shuttered its doors, and another local-serving business is gone. The problem with Radio Shack is they were charging for the wrong thing. Most of us went there not for equipment, which they sold, but for technical help, which they gave away for free.
Web technology has changed the retail electronics business the way it has changed everything else. Today, people go to the few remaining electronics chains and then go online to find out where they can get it cheapest. If we’re not willing to pay a little more to shop locally, those local-serving stores are all going to die. They can’t compete with the giant online retailers on price and offer service at the same time.
Changes are also deeply tied into the commercial real estate market. When a property like the Malibu Village Center sells for roughly $120 million and then gets reassessed, the new property taxes pass through to the tenants. It’s pretty much a death knell for certain smaller kinds of business that can’t or won’t pay the new rents. Rumors persist that Banana Republic may also be pulling up Malibu stakes, but their employees deny it, although, frankly, employees always seem to be the last to know. There is also little doubt that once the movie theater’s lease is up in a year or so, they are gone. What we need is additional commercial space. I know to some of you that idea is anathema, but if we don’t relieve the pressure created by the shortage of new rental space and the demand stays high, then rents continue to rise, and the little guys are squeezed out
There is a bright sign in the local shopping center world. The Kronke Center on PCH has engaged Jay Luchs as the broker to handle leasing, which is a major step forward. Granita, located in that center, has been empty for over 10 years, and recently Theodore’s, which had several stores in the center, also moved out. I guess even billionaires get tired of looking at empty stores and writing checks, so it’s actually very good news. If any of you are interested in the spaces, call Jay Luchs at 310.407.6585. (That’s a free plug for Jay — not that Jay needs a free plug, but I feel badly for the other tenants in the center who get hurt when there are empty stores.)
Technology changes every industry it touches, sometimes radically. Sometimes the industries just disappear. Last night, I was watching an Amazon Prime documentary about all the old royal families made from old newsreels, shot pre-World War I. What was most striking was not the old royal families — almost all gone now — but the horses. Horses were everywhere, pulling carriages, pulling wagons, carrying cavalry officers in flashy uniforms. The auto was still just a novelty and then, 10 years later, thousands, if not millions, in the horse industry were unemployed and out looking for new kinds of work permanently.
Today is no different. Smart phones and new apps have led to the creation of Airbnb. It’s turned the rental market upside down. It’s taken many apartments out of the housing stock and turned them into short-term rentals. You can rent out your spare bedroom and help pay the rent or the mortgage. At first, cities were upset because they weren’t getting their Transit Occupancy Tax, as they would with a hotel. Airbnb solved that problem by collecting the tax for the cities. Still, that leaves many neighbors furious that they’re living next door to a hotel room with transitory tenants, and others delighted to make the extra income to help make ends meet.
The same is true with taxi cabs. In New York City, which limited the number of taxi medallions issued, a taxi medallion went for hundreds of thousands of dollars. With the advent of Uber and companies like it, the market for medallions has collapsed and cab companies are already going belly up. In Europe, cab drivers are protesting, blocking traffic and trying to get their governments to block Uber and others. The difference is American capitalism vs. European protective capitalism — which is better in the long run? (Well, it’s probably too early to tell.)
So far it is a bit of a sticky Malibu summer, but that hasn’t cut down on the traffic, and, by this time next month, we will certainly be ready for all of our visitors to go home.