The Empty: a Theory
The economic and social expectations (and the wealth that sustains the expectations) of so much Memphis commercial space is too great for a local grassroots entrepeneurial ecosystem to successfully form in that space, given Memphis' present density and available capital.
As a result, buildings remain empty rather than rented or purchased at economically sustainable and viral lower levels.
It's a theory, and subject to proof, if not too badly theorized.
Is it a verbose way of saying we got speculation going on? I think it's more than speculation.
It's that those at the top of the Memphis pyramid are oblivious to the large wealth gaps that separate them not only from the poor but from the middle class. Consequently, they set their expectations to their and their peers' resources, rather than the resources available to Memphis' talent rich, capital poor entrepeneurs.
Labels: economics, entrepeneurship, hierarchy, Memphis, real estate, retail
posted by gatesofmemphis at 12:55 PM
10 Comments:
Great post. I think there are several issues that exacerbate the problem. To start a business in Memphis you must get approval from the city, the county, the state, the IRS. If you're opening a business that will be open to the public, a restaurant, a bar, a coffeeshop, you're looking at a whole litany of regulatory bodies you'll have to deal with. Professionals and potential contractors must deal with the licensing authorities that govern their professions.
These regulatory hoops prevent middle and lower income individuals to open businesses. To add insult to the injury of these initial expenses, expect to spend a significant about of time filling out tax schedules and forms throughout the year. Many people balk at the daunting task of filling out these forms "under penalty of perjury."
I think the removal of these regulatory obstacles will go a long way to opening the marketplace to newcomers.
In addition to being one of the poorest cities (i.e. markets) in the country, ganja blue hit the hammer on the nail. Waves of bureaucratic paperwork, taxes, regulations, and a fairly unfriendly government (i.e. frontline folks downtown) make Memphis a very difficult place to start a business. And that's before you try to open your doors and sell a product.
Is that Booker guy available any time soon?
Speculators, I think you hit on it. They all would rather hold empty buildings than rent, sell or lease at reasonable, reality-based rates. They all think they're going to hit a home run and someone is really going to come in and pay exorbitant rental rates. And then when they finally relaize they can't get a kazillion $ per suare foot, they raze the building and park a few cars there.
We have a similar problem in Milwaukee, and I've wondered if they use some of their vacant property to shelter their profits or something like that.
Everyone here could learn a lot from this website
http://mises.org/
Please take some time to read and learn.
Mr. Blue is getting there and on the right track.
Mr. Gates, well.....
thanks for all the comments. ganja blue what you say is true but true everywhere, not just Memphis.
However, since the Memphis market is poorer, possible entrepeneurs are poorer and bureaucratic hurdles require money to overcome, perhaps they become particularly onerous.
Plus based on Sherman's comment, they are not just relatively but absolutely onerous here. Which may be due to the same phenom I posted about: Memphis government is oblivious to entrepeneurs outside of the big boys and therefore "price" services as though all businessmen have the dough to pay for them.
Anyway it's a theory. Part of testing it would be establishing whether Memphis has a particularly empty problem, which may not be true given Dave's comment. And determing whether the cost of space in Memphis vs. revenue is out of balance.
I was just looking at a copy of
Memphis Then and Now a pictorial look at Memphis landmarks in past and present. I was a little embarrassed at what little regard our city has for historical landmarks. For example, the Hickman Building has been vacant since 1971, it has been damaged by fire and despite the spectacular view Autozone Park over right field, it remains for sale today.
The best opportunity for entreprenuers is in the 'hood' where the big boys are sitting around speculating. Maybe the hood will revitalize some day until our speculators come in again and seize up the land and progress.
What we need is an economic facilitor that is passionate about helping people jump through all the hoops.
In the third world it can take you anywhere from 5-13 years to legally obtain property rights hence most of their market places are extralegal and poor. Related to this, a good read is "the mystery of capitalism-Why capitalism triumphis in the West and fails everywhere else."
Whether you can't obtain land because the government is corrupt and slow or have speculators that withold the land- it seems that our potential all hinges on the land. It's a squatter issue- whether they are rich or poor.
You're theory is right on. My project is currently being stalled thanks to speculation going on from a developer who is "suddenly interested" in the land where our project is being considered....
Are you talking specifically about the emptiness at Overton Square? The totally empty block to the south is part of the explanation, I think. It was a mistake to allow the entire block to be paved over as a parking lot. The emptiness of that makes the area unappealing.
Post a Comment
<< Home