Jun

23

Henry George has the insight that all business decline cycles started from excess rents. Presumably the rents in those stores which on Fifth Avenue run $ 3,000-3,500 a square foot per year, but for office space in Time-Life itself rent for only $65.00 a square foot per year, are too high for the companies to make a profit.

Let's say they are $ 500 a square foot. That means a 10,000 square foot store has to cover 5 million a year in rent. If rent is 15% of sales, that means sales of 35 million a year from 10,000 square feet or 3.5 thousand a year per square foot. That's $12 a day per square foot to break even. That seems high. The willingness to pay such rates is probably a symptom of decay or bad management?


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