Old gas stations

LizzieMaine · Jun 26, 2018

The sad thing is, we have no particular need for more office space in this town -- there are plenty of vacant storefronts and offices downtown. If they must demolish, better there should be an affordable apartment building on that corner, since increasingly young people are being driven out of town by the lack of decent rentals. But nooooooooo.

We also don't have any gas stations left in the neighborhood at all now. If you want gas you have to drive way out to the outskirts. But there's fifty places in town where you can buy crappy art.

Ask not for whom the gentrification bell tolls, it tolls for we.

2jakes · Jun 26, 2018

Fading Fast · Jun 26, 2018

LizzieMaine said:
The sad thing is, we have no particular need for more office space in this town -- there are plenty of vacant storefronts and offices downtown. If they must demolish, better there should be an affordable apartment building on that corner, since increasingly young people are being driven out of town by the lack of decent rentals. But nooooooooo.

We also don't have any gas stations left in the neighborhood at all now. If you want gas you have to drive way out to the outskirts. But there's fifty places in town where you can buy crappy art.

Ask not for whom the gentrification bell tolls, it tolls for we.

Despite being a capitalist, I get that capitalism doesn't get it right all the time, but why would investors put up unneeded office space if apartment rentals are in demand? Somebody is spending money to wreck that station and put up the office building - if it's a bad allocation of capital (a bad investment) why would they do it - any thoughts?

In NYC, you can tell what's in demand as those will be the new building going up and the conversions of old ones. For several years it was all about luxury apartments (new ones being built and old office buildings and hotels were being converted). Now that the influx of Chinese investment money to buy condos has slowed, most new construction is currently about office buildings as - in the areas where they are building - demand and rent rates are rising.

2jakes · Jun 26, 2018

Re-Tirement Home

March 1940. "Secondhand tires displayed for sale at service station in San Marcos, Texas." A leading candidate for the first Krispy Kreme franchise. Medium format negative by Russell Lee for the Farm Security Administration.

LizzieMaine · Jun 26, 2018

Fading Fast said:
Despite being a capitalist, I get that capitalism doesn't get it right all the time, but why would investors put up unneeded office space if apartment rentals are in demand? Somebody is spending money to wreck that station and put up the office building - if it's a bad allocation of capital (a bad investment) why would they do it - any thoughts?

In NYC, you can tell what's in demand as those will be the new building going up and the conversions of old ones. For several years it was all about luxury apartments (new ones being built and old office buildings and hotels were being converted). Now that the influx of Chinese investment money to buy condos has slowed, most new construction is currently about office buildings as - in the areas where they are building - demand and rent rates are rising.

My only guess is that it's real estate speculation. I imagine it's easier to flip a lot with a new building on it than one with a tired old empty gas station. The owners may be banking on the spread of gentrification into the neighborhood, which is slowly but surely encroaching on my part of town. God only knows what will actually go into the new building, probably a geriatric hot-yoga studio or something equally bourgie.

Trenchfriend · Jun 26, 2018

Capitalism in the final stage. But old Germany is fastly catching up, so you can see the development on a similar level, here. The market is totally saturated. Increasing overcapacities in logistics, overcapacities in office space, overcapacities in hotel/gastronomy, "dead mall cities". Weak conjuncture, permanently.

Tertiary sector...

Trenchfriend · Jun 26, 2018

Fading Fast said:
if it's a bad allocation of capital (a bad investment) why would they do it - any thoughts?

Speculative business? To "have a foot in the door", at least? Depreciation trickery?

Fading Fast · Jun 26, 2018

Trenchfriend said:
Capitalism in the final stage. But old Germany is fastly catching up, so you can see the development on a similar level, here. The market is totally saturated. Increasing overcapacities in logistics, overcapacities in office space, overcapacities in hotel/gastronomy, "dead mall cities". Weak conjuncture, permanently.

Tertiary sector...

Since you brought it up, the over investment you refer to, IMO, is driven by our state-run Central Banks (our Fed, your ECB) which have been pumping cheap (here in the US) and free (in Euroland) money into the economy for almost a decade while also buying up massive numbers of bonds. They've made capital all but free (a purely gov't driven event) and, thus, there's too much investment which, as always, won't end well.

Fading Fast · Jun 26, 2018

Trenchfriend said:
Speculative business? To "have a foot in the door", at least? Depreciation trickery?

Maybe - all could be the answer, but I doubt someone in a small town in Maine is truly engaging in tax-loss-driven investment or grab-the-land-at-any-cost speculation. Instead, my guess is they want the investment to work out but, based on Lizzie's assessment of the market, should have been building residential not commercial. That said, for all we know, they could already have a tenant signed up for a long-term lease.

Trenchfriend · Jun 26, 2018

LizzieMaine said:
God only knows what will actually go into the new building, probably a geriatric hot-yoga studio or something equally bourgie.

Physioptherapy, because their are still not enough of them and we all need of course Kindergarten-crafting very very much!

2jakes · Jun 26, 2018

June 1939. "General store in Pony, Montana. Back when the brands on stallions, bulls and heifers migrated to the gas station. Arthur Rothstein for the Farm Security Administration."

LizzieMaine · Jun 26, 2018

It's an interesting discussion at any rate, and relevant to the thread -- the explosive boom in the construction of gas stations during the postwar era was fueled to a considerable extent by oil companies speculating in suburban real estate. They'd swoop in, buy all the good corner lots, and then make a killing selling the sites down the line. The gas stations built on those sites were only incidental to the true purpose.

Fading Fast · Jun 26, 2018

LizzieMaine said:
It's an interesting discussion at any rate, and relevant to the thread -- the explosive boom in the construction of gas stations during the postwar era was fueled to a considerable extent by oil companies speculating in suburban real estate. They'd swoop in, buy all the good corner lots, and then make a killing selling the sites down the line. The gas stations built on those sites were only incidental to the true purpose.

Nothing says an oil company can't speculate on real estate, but you seem to be implying that they were hiding this true purpose. Were they and, if so, why? I have no idea what the were doing or why - so not arguing a point, truly just asking a question.

LizzieMaine · Jun 26, 2018

Not really hiding it, except perhaps from the poor souls they leased the stations to and convinced they were "independent businessmen building up a place in their communities." Until somebody else wanted the land, that is.

Fading Fast · Jun 26, 2018

LizzieMaine said:
Not really hiding it, except perhaps from the poor souls they leased the stations to and convinced they were "independent businessmen building up a place in their communities." Until somebody else wanted the land, that is.

Basically, the only "old-time" small businesses that have survived in NYC - bakeries, hardware stores, clock repairs, butchers, etc., - own the building they are in. If you don't own your business' building and the land it's on, you are at risk every time your lease comes up.

Trenchfriend · Jun 26, 2018

In Germany, we normally call newly built business-realties "depreciation-objects", when there is no explanation for the origin of such places, in relation to the real conjuncture. More depreciation > less calc. annual surplus > less corporate income taxes to pay.
Or any other kind of creative financial accounting.

But the curious thing is in fact, the we still got these unexplainable overcapacities of gas stations in agglomeration areas, in Germany.

ChazfromCali · Jun 27, 2018

Fading Fast said:
Nothing says an oil company can't speculate on real estate, but you seem to be implying that they were hiding this true purpose. Were they and, if so, why? I have no idea what the were doing or why - so not arguing a point, truly just asking a question.

Which reminds me of what I heard somewhere about McDonald's. "A real estate company that happens to sell burgers."

Trenchfriend · Jun 27, 2018

German car-industry. Financial companies, selling cars, besides.

Fading Fast · Jun 27, 2018

ChazfromCali said:
Which reminds me of what I heard somewhere about McDonald's. "A real estate company that happens to sell burgers."

That same combination is actually playing out in retail - old-line department stores like Sears and Macys - which are finding that their real estate holdings are worth more than their retail businesses and are selling / leveraging those holdings to keep their retail businesses liquid.

Sears would have long ago been in the dust bin if not for its real estate holdings and Macys - which might actually be turning its retail business around - wouldn't have had the liquidity to do so without having had its real estate holdings to provide liquidity.

I knew the owner of a very successful NYC steakhouse in the '80s who basically lost his business (sold it cheap to his landlord) as the landlord gave him two offers at lease renewal time - a huge rent increase or a low-ball bid for the business.

The restaurant owner - in his late '60s at the time - didn't have the energy to move to a new location (it is no small effort to open a restaurant in a new location in this heavily regulated city) and didn't want, at his age, to make the added capital investment into the business a move would require, so he sold at the low-ball bid.

As he said, the hardest thing to do would have been to sell the business to an outside investor without a long-term lease in place. Hence, he basically had very little choice. Maybe not a nice guy, but his landlord was schrewd.

It was an early lesson to me about the need to own your own land and building if you are a small business owner. But I recognize that it's easy to say that, but hard to do as most small businesses have limited capital. Which goes back to one of my core premises for everything: life is hard.

Ghostsoldier · Jun 27, 2018

...and then you die, lol.

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