Rent spike puts retailers on rocks
Aspen, CO Colorado
ASPEN ” Businesses at the Mill Street Commercial Center have received notices that their new landlords are raising the rent by as much as 30 percent, forcing them to either commit to the proposed leases or gamble that their existing agreements will be renewed when they expire next year.
“I feel like I’m being held hostage,” said Tim Fortier, who has run Aspen Tile from the 465 N. Mill St. building since 1984. ” If I don’t sign this, who knows what they’re going to do to me in a year? With the new rent increase, it’s not going to be affordable.”
The notices ask the tenants to commit to a lease that would take effect Sept. 1 and expire Aug. 31, 2010. Their current leases, which were agreed upon last year with the previous landlords, run out in October 2008.
Tenants at the Mill Street Commercial Center, which is zoned Service-Commercial-Industrial, or SCI, were given the notices by Katie Reed Management LLC, which manages the property on behalf of North Mill Street LLC, which bought the 20,000-square-foot structure for $15 million in June. The building’s tenants include businesses such as a bike shop, a laundromat and a video store, among others.
Andrea Regan, president of Katie Reed Management LLC, did not return a telephone message Friday. Aspen lawyer Andrew Hecht, who led the group of investors that bought the building, also did not call back.
“I haven’t decided what to do,” said Brad Jasicki, owner of Replay Sports, a second-hand shop that’s been there five years. “I haven’t crunched the numbers, but I don’t think it’s feasible for me.”
The notice to Fortier says that rent the basic rent is being increased by 5 percent annually, instead of the 3.5 percent increase that normally had kicked in each year. But the biggest change in the lease is the addition of paying the Common Area Maintenance fee, or CAM, which includes taxes, utilities and insurance for the building.
Specifically, Fortier, who occupies the most space of all of the tenants at 4,850 square feet, said his rent will increase from $13,337 per month to $14,004 for the first year. Add the monthly CAM fees of $4,243, and Fortier’s looking at a more than 30 percent increase ” or more than $50,000 annually ” over his current lease.
While the notice is dated Aug. 7, Fortier said he received his Thursday. The notice also said tenants had until 5 p.m. Friday to decide whether to keep the existing lease or commit to the extended one. However, after meeting with Katie Reed Management’s Russell Cattaneo on Friday, tenants said he agreed to give them some extra time to decide.
Fortier said he expected a rent increase, but given the size and timing of the notice, he doesn’t feel the landlords are playing fair. Fortier said he’s concerned that if he doesn’t commit to the long- term lease, once his current one expires he’ll be kicked out. A reasonable scenario, Fortier said, would be to have the option of paying the higher rent once the current leases expire.
“These new owners are very smart people,” he said. “They’re trying to come at us a year earlier [than when the current leases expire] for more money.”
It has been widely held that the new owners plan to eventually tear down Mill Street Commercial Center and model it after Obermeyer Place, an SCI-zoned development nearby on Bleeker Street. However, no applications have been filed with the city.
Fortier said he and other tenants realize they are on borrowed time at their current location.
“We all know they’re going to tear it down,” Fortier said. “It’s just the idea of them trying to raise your rent a year in advance.”
Michael Wampler, owner of the Aspen Velo bike shop, said he was taking a wait-and-see approach.
“We knew we had a good deal before, but this is supposed to be affordable rent,” he said. ” With the new rent increases, it’s not going to be affordable. But there’s not much I can do. I don’t have much of a choice. I have two kids to feed.”