This morning, as your blogger was talking with the flooring person his landlord hired to rip up his linoleum kitchen floor and refinish the hardwood floor under it, the subject turned to landlords who kill their own cash cows. The flooring contractor mentioned a friend who had opened a pub in a long-vacant storefront in a Philly neighborhood on the mend. The place proved popular and the proprietors were doing very well. Then, he said, the building owner hiked the rent – a good bit more than inflation might warrant. After three years of such rent hikes, the pub owners threw in the towel. This, he said, happened about three years ago. The space has sat vacant ever since.
This story came to mind as we read the report in Foobooz that Pumpkin Market, the cafe-grocery from Pumpkin Restaurant owners Ian Moroney and Hillary Bor, is shutting its doors. The reason for the closing of this popular and colorful addition to the South Street West restaurant row in Graduate Hospital: A 65% jump in the rent on its 1610 South Street storefront, according to the market’s Facebook page.
Before continuing down this path, let us reassure readers that Pumpkin Restaurant in the next block west will remain open.
Now back to the head-scratcher: What on earth would explain a 65% rent hike in a single year? Presumably, building owners charge rents sufficient to pay for upkeep and a decent profit, and maybe a fund for emergency repairs as well. Those costs haven’t risen all that much over the last few years.
It is, however, also safe to say that in areas where demand for space is high, owners will charge what the market will bear. And the restaurant scene on South Street West has definitely taken off in the last year or two, with new restaurants popping up at every turn, the most recent announced addition being Calexico, whose fall opening we announced on Tuesday.
Perhaps the owners of the building housing Pumpkin saw all this activity and smelled money. A good restaurant, we guess, could bring in more revenue than a small grocery and coffee shop. (We’re just speculating; we’re not business analysts.)
In which case, we hope their assessment of what they can get for the space proves accurate. We’re not so sure it will, at least not with a restaurant tenant. Most restaurants don’t throw off wads of cash – their earnings on sales are fairly modest, if not as slim as those of supermarkets. But maybe they will find a restaurateur who can run a place that earns enough money to pay the steeper rent.
Otherwise, the former Pumpkin Market may have a “Space Available” sign in its window for some time to come.
Pumpkin Market Closes (Foobooz)
Photo from Pumpkin Market’s Facebook page