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SID’s Success A Mirage, Can’t Survive Downturns

Empty storefronts, some with “for rent” or “for lease” signs and others emptied of furniture and fixtures, dot the downtown district. Mayor Pasquale “Pat” Menna has called on landlords to lower rents to fill vacant storefronts

 “We’re working with property owners to talk about those stores that are vacant on Broad Street, which has the highest vacancy rate”

  “We’re trying to talk about issues that keep them from being rented.”

“We’re trying to talk to property owners. Are they being reasonable on rents? Are they being creative with leases and giving prospective tenants (leasing) signing breaks until things improve?”

“We’re also asking them to work with (existing) tenants to help retailers hang on.”

……..he wondered why a property owner would prefer an empty storefront to filling it with a tenant, even at a discounted rent.

“What’s worth more, that or an empty store?” he said.


Sounds pretty bleak. I think what this town needs is a Special Improvement District! Why should landlords have to lower their rents (supply and demand maybe?) when the creation of a SID will have businesses crashing the gates trying to secure a spot in retail heaven?

But wait! The Asbury Park Press article these quotes are taken from is about Red Bank’s Rivercenter, that shining example of a successful SID that consultant Stuart Koperweis was thumping his chest about at all those meetings. We were told that if we would only follow his advice we, too, could have a beautiful downtown like Red Bank’s.  

Well Rivercenter now has something like 33 vacancies listed for rent. (They don’t make public their total vacancy rate.) Property owners are being told to lower their rents after having been taxed thousands of dollars for improvements. You don’t need to have a SID to charge low rents to attract tenants. That’s just basic market economics. These SIDS were supposed to make slashing rents unnecessary. They are an attempt to use government power to supplant the market. It doesn’t work. The market always wins.

It’s easy to have a successful SID when the country is drunk on cheap, easy credit. Now it’s hangover time. The success of Rivercenter was a mirage. The SID creators, turns out, are not smarter than the market. Red Bank should end it’s expensive SID and allow the free market back in. If rents have to go down, at least the property owners won’t have any more expensive SID expenses to cover.

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