Would a “freemium” model for empty storefronts and office space be good for LA and property owners?

Sometimes I think great ideas can come from the naivete of others. In that vein, let me present an extremely naive idea and see if it spurs any thoughts by those more knowledgeable. — Douglas

Driving around Los Angeles is that object lesson in the state the economy. It is my personal, anecdotal survey of what is happening in the city. Right now, it is worse than I have ever seen it. Block upon block of storefronts with NOW LEASING signs or boarded up windows — High-rises with empty floors — parking lots empty except for the weeds poking through the asphalt. The city seems to be rolling up the sidewalks and reverting to its natural state of grasses and tumbleweeds.

I think there might be a way to help everyone get things moving again. What would happen if property owners “leased” out office and retail space for free? Wouldn’t a building which is in good repair, well-lighted and having foot traffic be more inclined to attract more tenants than an abused boarded-up, graffiti-covered blight on the neighborhood?

I assume there are some benefits to leaving properties empty. Utility costs are nil and there are surely tax breaks due to the loss of revenue. Still, wouldn’t it be better for everyone if these spaces were filled and functional, even at reduced or no rent?

Taking a sign from the Internet world, wouldn’t it be beneficial to develop some sort of “freemium” model for underused commercial real estate? Wouldn’t it be better for all to return these properties to a productive state, if only on a temporary basis? I could foresee month-to-month agreements where small businesses and organizations could use the space, but also be aware that deal could be revoked if a paid renter was found. It isn’t very stable for an organization, but I know I could live with that arrangement if it meant I had a place to meet and hold classes. In some cases, these “freemium” renters could even turn into full tenants as the economy improves. Just as with Internet services, converting a few to the premium plan could support the free use by others. Even more, it could introduce small businesspeople to the idea of an eternal office and the benefits it provides.

How would it work? My first thoughts turn to my own needs at the moment. I could really use a small 10-20 person space to hold meetings and New Media classes. Since I CAN work out of my house, I do, but I can’t and don’t necessarily want to bring strangers into my home for training. I need something cheap to provide me some flexibility, without breaking the bank.

Each day, I walk by 3-4 empty auto sales lots here along Van Nuys Boulevard where I live. They have been unused for months and detract from the neighborhood dramatically. Every time I walk by I think of how I, ad others, might be able to use those spaces, but I have no idea where to start.

Further up the street is a small 3 story office building that has NEVER had a tenant in the 3-4 years since it has been completed. I have thought about calling the number on the FOR LEASE sign, but I am at a loss for what I would say. “Hey, I noticed your building is empty and thought maybe you could give me and my friends a few rooms rent free!” It seems absurd to even say it, but maybe that is exactly what we need to do.

I would love to hear from more knowledgeable people about how something like this might be “sold” to property owners. I don’t have any experience in that area so I am sure I am missing some important aspect, but I still think there might be something to this “freemium” model for office and store space. Let me know what you think about why this might work or why it can’t. I would love to learn more about the realities of commercial real-estate and how it might be turned to everyone’s benefit.

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3 Responses to Would a “freemium” model for empty storefronts and office space be good for LA and property owners?

  1. Eric Harnden says:

    Hi Doug,

    Great article.

    I’ve actually heard of things like your idea and similar to your idea being done.

    One example was in leasing space for a non-profit thrift store. Not only was the “dead” property more attractive, the landlord got a write-off.

    Another place I heard of something like this was more in the area of “creative financing”. Carlton Sheets real estate training program covers a lot of creative financing and explains that sometimes all it takes is the right conversation at the right time by the “right” person to get whatever kind of deal you want going.

    Empty locations, be they homes or businesses, are empty for various reasons. Your offer to bring life to it may just be the thing they need. I’m sure there are hard, well let’s say “noses” that won’t go for it but to me it’s a numbers game and there’s bound to be SOMEONE out there somewhere who would go for it!

    I, like you, I think, am a person who looks at areas and thinks of the possibilities. I imagine all of my business ideas come to life in some deserted strip mall or abandoned warehouse.

    I think you should make some calls and do some face to faces!

  2. Daniel says:

    I have been thinking of this too, there are many vacant store fronts here in Altadena and we were wondering if they could be put to good use. We figured they would be a good place to meet for a meeting or could be used by an artist that would like to do a brief show, etc.


  3. dewelch says:

    Yes. Exactly what I was thinking, too

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