An article from the Cornell Sun regarding one of the major (if not most loved) landlords in Collegetown:
Businesses Allege Ithaca Renting Company Drives Tenants Away Through "Horrible Leases"
MARCH 10, 2014 1:05 AM
By SARAH CUTLER
Collegetown in recent years has seen an increasing number of shuttered stores and restaurants, and in nearly all of these vacant spaces — which include the Green Café and the former Pita Pit — hang signs for the Ithaca Renting Company. According to some Collegetown business owners, this is no coincidence.
The vacant Green Cafe on College Avenue is one of several properties that the Ithaca Renting Company owns. (Dylan Clemens / Sun Staff Photographer)
These business owners have alleged that by charging high rent prices, offering leases unfavorable to business owners and misleading some potential tenants, Ithaca Renting and its manager Jason Fane have contributed significantly to the number of empty storefronts.
Most recently, in January, commercial Collegetown saw the closure of The Gates — an Ithaca Renting property on Eddy Street — whose owner, Marian Flaxman ’08, claims the company misled her.
When she moved in 2012 from running Culture Shock — the live music venue on the Ithaca Commons that she rented from Fane — to owning The Gates, Flaxman was pleased to find that in the space above The Gates was a restaurant with hours that would not coincide with the times her venue would operate. Residents of the apartment building above Culture Shock had filed noise complaints against her, which she said is the primary reason she sought out a new location.
But she said she soon learned that The Gates shared a wall with apartments. Two months after opening, Flaxman found herself embroiled in a lawsuit with Fane over new noise complaints.
“Fane sued me and tried to evict me,” Flaxman said. “I even asked, when I [first] looked at the space, what was behind that wall, and [the agent] said it was storage. When you rent a space and invest in the space, you plan on being there for a long time and having a good relationship with your landlord. When he sues you as soon as you open, he violates your trust.”
Fane, however, said in an email that Flaxman “admits she is in violation of her lease,” which is specific about the noise level she is permitted to make. He added, though, that the leasing agent who worked with Flaxman has since been fired, since Fane believed he was “dishonest in many ways.”
‘Oppressive rent and horrible leases’
Fane’s major commercial Collegetown properties include Collegetown Center, Collegetown Court and Collegetown Plaza on Dryden Road. In addition to properties in Toronto and New York City, Fane owns more than $38 million in assessed Collegetown real estate, making him one of the largest landowners in Collegetown, The Sun reported in May.
The high rent Fane charges for Ithaca Renting spaces discourages many potential tenants from doing business with him, according to Brad Weiss MMH ’03, the owner of Level B and the president of the Tompkins County Restaurant and Tavern Association.
“Oppressive rent and horrible leases keep most savvy businesspeople, including myself, away from renting from Jason,” Weiss said. “You’d have to believe in a miracle to sign some of those leases.”
Though Weiss is not a tenant of Ithaca Renting, he claims he was misled years ago when attempting to rent a space from the company. When Weiss asked about obtaining a liquor license for the Masonic Temple on Cayuga Street, which he hoped to rent, one of Fane’s agents told Weiss he’d have “no problem” getting the license, Weiss said.
But when Weiss called City, police and New York State Liquor Authority officials to confirm this claim, he was told the building was unlikely to get a license due to past owners’ legal problems in the space. Weiss said he avoided signing a lease on the space.
“When you go to the landlord, you expect the person is going to be looking out for your interests and trying to help your business — not saying that you’re a novice, and that’s why you failed,” Weiss said.
John Yengo, the Ithaca Renting agent who showed Weiss the property, said in an email that he did not remember showing Weiss the property and that Ithaca Renting agents leave licensing issues to liquor licensing agencies.
Fane said he did not hear, and thus could not comment on, the conversation between Weiss and Yengo, but did add that in his observations over the last 30 years, applicants who complied with the state’s requirements for a liquor license were typically able to get one.
“If you don’t try, you can’t succeed” at getting a liquor license, he said.
Other current and former tenants of Ithaca Renting said it is Fane’s business practices that make it difficult to run a successful business in his properties. Mark Kielmann ’72, owner of The Nines on College Avenue and a Fane tenant from 1976 to 2005 at The Chariot on Eddy Street, said Fane’s leases have become “increasingly complicated” over the years, growing from around four pages to almost 25 pages.
“We only had two leases [at The Chariot] — really long ones — and the second one was way more complicated than the first one,” Kielmann said. “I think, in some ways, Jason is playing the game of business — he knows his business very, very well. A lot of unassuming young people come expecting someone to be straightforward with them, and that doesn’t happen.”
Yet on a drive through Collegetown and the Commons, Fane pointed to numerous empty storefronts owned by other landlords as evidence that Ithaca Renting is not the only company having trouble filling spaces. Fane said several of his tenants, including the Souvlaki House, Sangam and the Vietnam Restaurant, are examples of success stories.
“If you go through Collegetown, you’ll see some businesses that have been there for many decades, while others come and go,” he said. “The conclusion I’ve come to is if someone wants to run a restaurant, he should know how to do that, and not just how to run a kitchen.”
Indeed, Annie Quach ’05, the general manager of the Vietnam Restaurant, said her parents — the restaurant’s owners — have had a good relationship with Fane since they moved their business to one of his spaces on Dryden Road more than 20 years ago.
The Gates — a former Collegetown restaurant and bar — closed in January and is one of the properties owned by the Ithaca Renting Company. (Connor Archard / Sun Sports Photography Editor)
“My family’s experience with him has always been positive, and we’ve always had a healthy relationship,” Quach said. “This business is my family’s livelihood, and I think everyone involved is doing something right, because it’s a mutually beneficial relationship.”
She noted, though, that it is difficult to compare established businesses like her family’s with new businesses, since leases, rent prices and the business atmosphere in Collegetown have changed over the years.
A tough business environment
Fane emphasized the importance of having “some amount of vacancy” and turnover in a healthy economy to allow entrepreneurs opportunities to open new businesses. And the businesses that fail in his spaces, he argues, largely fail because of the owners’ lack of experience.
“There’s a problem with people who are chefs, but not businessmen,” he said. “The guy in the kitchen maybe doesn’t know how to market a restaurant, or talk to a customer — that’s a different skill.”
Fane added that brick-and-mortar businesses on the whole are changing because of increased online shopping, which drives businesses like video stores and bookstores off the market. In addition, excessive retail space contributes to retail vacancy nationwide, he said.
“There is high retail vacancy all over the country because there is too much retail space,” he said. “If you drive around other neighborhoods than Collegetown, you will see plenty of vacancy. If you go to some other upstate cities, such as Syracuse and Utica, you will see horrendous vacancy rates.”
Others observe that Collegetown is a tough place to do business for myriad reasons outside of a landlord’s control: the national economic downturn, an uptick in online shopping and business owners’ difficulty in making ends meet when students are away several months out of the year.
Prof. Stephani Robson ’88 M.S. ’99 Ph.D ’10, properties development and management, said she discourages students in her Restaurant Development course from opening eateries in Collegetown. She said the problems she sees in Collegetown are “systematic” and can not be traced to any one landlord.
“Collegetown is an extremely difficult place to do business because you have a 32- or 36-week window to make money,” she said. “Costs are high, and for restaurants, margins are low.”
Because Ithaca is a small community, its colleges are the “big demand generators,” she added, and when colleges are not in session, a chronic lack of parking discourages locals from patronizing Collegetown.
“It’s a double-whammy,” she said.
Kalam Blessing, the owner of Pita Pit on Dryden Road from 2009 until it closed in 2012, said most of the difficulties he faced in business stemmed not from Ithaca Renting itself but from the number of slow months in Collegetown — when school was not in session and students were not around. However, Blessing did add that Fane’s steep rent made it more difficult to keep afloat.
“I know that other companies’ rents are a lot lower,” Blessing said. “In my first year of business, we had the second-highest growth in sales out of all the stores in the Pita Pit franchise, and we were still struggling. There’s something there that’s not right.”
Though he listed better locations, larger store size, higher ceilings and other characteristics of his properties as “some of the factors” that lead to higher rates, Fane would not disclose what he charges his tenants for rent. Fane said he does not know what rent other landlords charge or why his tenants believe that their rents are higher than that of other companies.
“I don’t get into [tenants’] feelings, and there is no psychologist on my staff,” he said. “Maybe some tenants are upset because their taxes and other expenses have gone up. Maybe they decide they’d rather do something else than running a retail business. Maybe they don’t realize how expensive it is for a landlord to make retail space appear.”
Ithaca Mayor Svante Myrick ’09 cited the businesses that have rented for decades from Ithaca Renting as evidence that it is possible to be successful as one of the company’s tenants. But he noted that the city is not “blind to the realities” of renting from Jason Fane.
“We know the terms of those leases are extremely difficult for new businesses, with high rents and strict terms. Frankly, the rent is too high,” Myrick said. “The city government historically has not had a positive relationship with [Fane].”
However, Myrick says he has made it a “priority” to improve this relationship.
“The city is not always happy with every decision [Fane] makes, and he’s probably not happy with every decision we make, but we talk,” Myrick said. “It’s clear he cares deeply about the city; this is where he got his start as a businessman. I’ve made it clear that the city would appreciate whatever he could do to make his properties more tenant-friendly, especially for new businesses just trying to get their legs under them.”
Here's an interesting ownership attachment:
http://infogr.am/who-owns-collegetown?src=web
The article link:
http://cornellsun.com/blog/2014/03/1...rrible-leases/