Sperity Real Estate Ventures

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Shop Locally, Boost the Economy

Over the past few years we’ve heard people talking about the importance of shopping local. These programs have been springing up across the country, urging consumers to join the “Buy Local” movement.

So, what difference does it make when communities shop at local businesses?

Well, the truth is when consumers buy from local stores instead of big box stores, more of their money stays in the community.

“Those purchases are twice as efficient in terms of keeping the local economy alive,” says The New Economics Foundation researcher David Boyle, in this article in Time magazine.

This movement plays a big role by boosting the economy and generating more jobs in the community.

Although sometimes the costs may be slightly higher at locally owned businesses, there are many benefits, such as lower transportation costs, more eco-friendly communities and the opportunity to form growing relationships with local business owners.

Buying local also alerts the community about the gaps in the market, creating a stronger sense of entrepreneurship and pushing for new businesses to prosper in markets that hadn’t previously existed locally.

When spend your money in RVA it keeps our neighborhoods unique with prospering local businesses versus streets lined with big box retail chains.

Here in Richmond, there are a few organizations that are dedicated to encouraging consumers to buy local goods and services. The Greater Richmond Retail Merchants Association is well known for their Think. Shop. Buy. Local movement, a large scale movement that works to promote the economic benefits of buying local goods by working across Richmond and the surrounding counties.

Originally created as a project at VCU, ShopRVA is a smaller nonprofit made up of local businesses, organizations, and individuals who are joined together to promote the culture and individuality of RVA. ShopRVA was created in 2009 and works to make RVA more green, economically and environmentally. Their goal is to make Richmond businesses into a strong foundation for a thriving local economy.

 “ShopRVA is new and filled with so much potential, people should listen to what they have to offer,” said Micah West, a student who worked with ShopRVA at VCU’s 2012 Social Media Institute. “They support the great things we have in the Richmond area and they want to express the creativity and personality of Richmond.”

These organizations work to remind us what makes Richmond such a unique city and they highlight why RVA is a wonderful place to live, eat, work and shop. With local restaurants on nearly every block, small markets throughout the Fan, and unique stores and boutiques in neighborhoods like Carytown and Libbie & Grove it is easy to shop RVA.

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Falling 2Q Restaurant Trends- Fast Food vs Casual Dining

Have you noticed a decrease in the amount of people dining at your favorite restaurants lately?

Well, a recent expert analysis by the global investment banking firm, Jefferies & Co. shows national restaurant earnings trends have weakened during the second quarter. It may come as a surprise that quick service or fast food style restaurants are holding on strong against the falling market trends especially when compared to full service restaurants.

Nation's Restaurant NewsAccording to an article on Nation’s Restaurant News, full service restaurants have been hit the hardest during this recent decline.

The instability in the economy plays the largest role in consumers dining choices. According to Jefferies’ analysts:

“Customers continue to struggle with economic/employment uncertainty, and affordability and value matter more than ever.” (per the NRN article).

The article also said that despite efforts made by casual dining restaurants such as discount and promotions, net traffic is dwindling.

Analysts even found a correlation between the rise in gas prices and the decrease in the amount of restaurant traffic.

“While gas prices spiked in March and have since come down, sales trends across the full-service restaurant industry have decelerated,” the Jefferies team noted in their report.

So the question remains why are fast food businesses doing better than full service restaurants? Is it just because of convenience and affordability?

The truth is, quick service restaurants have been exploring new concepts such as: menu ingenuity, creative advertising, and well-priced quality food.

Many fast food establishments have revamped their menus and created campaigns that showcase their efforts to become more affordable options to casual dining.

So, what are full service restaurants going to do to regain business?

In the NRN article analysts noted that consumers are looking for value, service, and atmosphere. With a good business plan and those qualities full service restaurants will recover.

The Restaurant industry proves to be unpredictable, as noted in another recent article on Nation’s Restaurant News, see how casual dining is making its recovery.

As the national restaurant market has declined in the past few months, have you noticed a change in RVA? Would you prefer a fast food option to your favorite dining dive in the city?

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Small rental property owners breathe a sigh of relief

There is always a lot of new legislation passed every year that sounds like a good idea at the time and generally goes unnoticed, and every once in a while the consequences of that legislation become horrifyingly apparent afterwards.

This past year, the legislation that was causing so much heartburn for small property owners was a new IRS requirement that anyone with rental property file a 1099 for any repairs that add up to $600+ over the course of the year. (see my post about it here, from December 2010)

Good news — the provision was repealed before it could take effect!! (here is the actual legislation that was passed to repeal the IRS provision, in case you would like to read it)

Hats off to the Realtor community for standing against this for the good of the mom-and-pop investors, who are the ones would be most affected by those proposed requirements — and for Realtor Magazine’s blog for bringing the repeal to my attention. From their description of how everything unfolded, it seems as though everyone understood that this was good to do:

When the provision was included in the small business bill, REALTORS® were among the first and firmest opponents of it, helping to ensure that Congress understood the provision was an example of over-reach that was never intended to burden mom and pop property owners. Members of Congress and President Obama got the message and, in a rare example of agreement between not only Republicans, Democrats, and independents, but also between House and Senate chambers and between the legislative and executive branches, lawmakers agreed the provision needed to come out.

Nice to know that we don’t have this provision coming up to haunt us over the next few years, isn’t it?

 

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Important! New IRS requirements for all landlords

PaperworkAnyone receiving rental payments from either residential or commercial properties will need to review the newly-enacted small business legislation called HR5297 with their accountant and how it expands 1099 reporting requirements.

Currently, only real estate professionals that engage in property management services have to use 1099 forms to report any service provider that they pay more than $600 in a given tax year.

The changes will be enacted over the next two years as follows (details from the NAR Issue Brief released recently — can be found online here or hosted on my site here):

2011 Rule: ALL persons who receive rental payments must provide Form 1099. This affects ALL owners (both individuals and businesses) of rental properties, both residential and commercial. Thus, “mom and pop” investors and those who invest in real estate for their personal portfolios are subject to the new reporting requirement. Only aggregate annual payments of $600 or more for services (but not goods) must be reported.
2012 Rule: All businesses, including real estate businesses, self-employed individuals and independent contractors will be required to make a 1099 report of any aggregate annual payment of $600 or more to any person from whom they acquired goods and services.

Please keep in mind that I am not an accountant, so before you act on any of this information (or panic. or dismiss.) please consult with your accounting/tax professional.  But when I saw this come across my desk, I thought it was important that you are aware of these new rules!

(*Warning! Sales pitch!*) And, by the way, here at Bandazian & Holden, we have dealt with these reporting requirements from when they were first enacted for real estate professionals in the property management field, and we are accustomed to handling the necessary paperwork for our clients.  If you don’t feel like dealing with it on your own, let me know and come on board with us. (*End of warning. Enjoy your day!*)

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Sexual orientation discrimination in housing? We won’t stand for it.

Residential Realtor logoWe have come a long way in the fight for civil rights in this country, and we have a lot to be proud of.  Unfortunately, in many states it is still absolutely legal to discriminate against someone for their sexual orientation when it comes to housing.  This needs to be addressed legally, but the Realtors aren’t going to allow any of our members to get away with such practices anymore.

Read through this article at Agent Genius to see what’s changed:  “Is sexual orientation discrimination in housing legal? Maybe.”  It’s great news!

According to the NAR, the Code of Ethics Article 10 has been amended:
Article 10: Equal Rights Amendment Passes:
The NAR Delegate Body approved an amendment to Article 10 of the Code of Ethics to prohibit discrimination on the basis of sexual orientation. In a roll-call vote, more than 93 percent of the Delegate Body voted in favor of the amendment. The Delegate Body decision confirms a vote by the Board of Directors in May.

As a personal note, AG strongly supports and applauds the measure taken that Realtors’ ethics supersede federal law so that no matter if it is legal or not locally, discrimination based on sexual orientation will not be tolerated from Realtors, a measure taken by Realtors.

Huzzah for the Realtor community for standing up for what’s right and making an amendment to the Code of Ethics to declare sexual orientation discrimination officially unacceptable!

Today is a day when I’m even more proud than usual to call myself a Realtor.

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Restaurant trends for 2011

Everyone wants to know what the future holds, and the good folks at Nation’s Restaurant News have given us a peek at the future of restaurant trends.  It is interesting to see what’s brewing on the front lines of the restaurant industry, although I bet a lot of those “hot trends” will burn out before they get anywhere — and even more won’t make their way here to Richmond at all.

(from Pushing Daisies)

Maybe Richmond will get one of these?

The one that they are most confident in is — pies.  Not only sweet pies, but savory ones, too.  From what the article says, the pie shop is the new cupcake shop.  I guess it makes for a good headline (and no denying that pies are tasty!), but there are other predictions they make that I’ve already seen happening locally:

• The new mom and pop. Self-financed restaurants built on limited budgets are growing in number. “This is an economic decision,” he said. “There are a lot of people out there who still want to open up restaurants, and it’s a good opportunity to look at real estate in a down economy.” The restaurants are typically small and the owners are extremely involved. Some examples are eVe in Berkeley, Calif., and Sons & Daughters in San Francisco.
As for this being a “new” trend, I wonder where they’ve been?  I pretty much exclusively deal with this type of operator, and from everything I’ve ever heard that’s been the same for our company for the past 36 years.  If it’s becoming more prominent lately, then that could explain why things have been so busy lately (see this post I put up from just last week for more on that).

•  One-ingredient restaurants. “Restaurateurs are taking one ingredient and building full restaurants around them,” Freeman said. Following on the several-year trend of gourmet burgers, the trend is extending to grilled cheese sandwiches, hot dogs and sliders. “We’re predicting perhaps a peanut butter restaurant next or a big biscuit restaurant,” he said.

Looks like City Dogs has been onto something — they’ve certainly done well, with two very busy locations now (Shockoe Slip & the Fan.  I wonder what other concepts we’ll see that will play with this one-ingredient format.

What do you think the biggest trends for restaurants in Richmond will be for 2011?  What are you hoping will be the new trends?

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Business is getting better, Richmond

Business is booming!  Relatively speaking, at least, the economy is buzzing along.  Things certainly aren’t where they used to be, but they are getting better.  Running a small business is tough, no doubt about it — but it’s always tough.

One of the first questions I hear is “how is business” — and the answer lately has been that business is great!  The business I’m in (commercial real estate and business brokering) is busier than it has been in the past couple of years.  I can’t speak for the entire industry, but our small piece has been rolling along quite briskly.  The period between the 4th of July and Labor Day weekend is usually dead for us, except for the residential leasing, but this year defied past trends and was the busiest we’ve had in a long time.

As I’ve said in the past, I’m a small business.  I’m not Coca-Cola or Dow Chemical.  I don’t need the whole economy to be in a bubble to be doing well.  I just need to do well with and by my clients and customers to be rewarded.  Conversely, I don’t need the whole economy to be in recession for my business to be spiraling downward, either.

It’s not just our business at Bandazian & Holden that has been on the upswing lately.  I’ve been hearing from more and more friends that their businesses are doing the same thing, and that brings me great hope for everyone.

Don’t take my word for it, though.  The news outlets are tapping into the data and things are starting to spring back (or at least stop going down) all over:

From Nation’s Restaurant News: Atlanta’s restaurants seeing better days

Operators in the city pointed to an increase in private parties and convention business, which they expect to continue as the holiday season nears. And while diners remain value-conscious, some restaurateurs reported that increased drink and appetizer orders are giving check averages a boost.
From the Wall Street Journal:  Consumers Show Signs of Stirring
U.S. retail sales rose for a third consecutive month in September, posting a stronger-than-expected increase that should fend off fears of a double-dip recession but doesn’t signal a strong recovery.
And from right here in Richmond, in Richmond BizSense: Retail Slowdown Slowing Down?
For the second quarter, area sales totaled $2.59 billion compared to $2.64 billion in the second quarter of 2009.  The decrease of 1.89 percent is the smallest quarter to quarter change since BizSense began analyzing taxable sales data at the end of 2008—a sign that the slowdown may be flattening out.
…

Restaurants and bars are also doing a little bit better, growing sales by more than 6 percent in the second quarter. That is a big change from the 1 percent to 2 percent decrease reported for previous quarters.

What has changed?  I don’t know. Maybe people are tired of being scared and sitting on the sidelines, waiting for more bad news.  What I do know is that we got ourselves into this mess, and it’s up to us to dig our way out — everyone working on their small piece of the hole.  There is plenty of money to be made in good times and bad times, trick is that the people have to earn their money in the “bad times”.  Let’s keep making this work!

What do you think?  Have you seen business improving in your corner of the world?

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Richmond wins!

Winner at the Delta County Fair, Colorado (LOC)

We're number one!

As I mentioned earlier this year in “Richmond loves its working moms“, I appreciate when the rest of the world acknowledges Richmond’s superiority in all ways. It seems there are lists for everything, and while I find it to be overkill most of the time — any list can justify itself as being relevant and highly insightful by the obvious addition of Richmond (or Virginia as a whole) to the top of its rankings.

Imagine my delight when I found a helpfully compiled list of Richmond’s awards on the Greater Richmond Partnership’s website (here) and a similar but not completely identical list on the City of Richmond’s website (here).

Browse the awards and bookmark the links for future reference.  Find a few that mean  the most to you and let everyone know how great Richmond is! (and feel free to rub it in to friends that live in cities that ranked below us…)

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Google LOVES Richmond!

Or they will, if we do things right…

There is a contest underway from Google where the stakes are high: one or more communities somewhere in the USA will be the test market for Google’s high-speed fiber network.  Here is the teaser from http://gigarva.com (who, in turn, took it from Google’s site, where it no longer seems to appear):

Google is planning to launch an experiment that we hope will make Internet access better and faster for everyone. We plan to test ultra-high speed broadband networks in one or more trial locations across the country. Our networks will deliver Internet speeds more than 100 times faster than what most Americans have access to today, over 1 gigabit per second, fiber-to-the-home connections. We’ll offer service at a competitive price to at least 50,000 and potentially up to 500,000 people.

The nomination phase is over, and now we need to get everyone in Richmond (and anyone outside of Richmond that wants to support our efforts here) talking online about why Google should pick us!  The next step of the process is going on now, and Google has been releasing updates on where each of the top nominated communities stand.  The winners of this phase are being determined based on the online buzz that each community generates around their nomination (see Google’s recent analysis of the data so far in this .pdf file).

Here is Richmond’s official video for the promotion of the program.  I think they did a great job with it! [youtube=http://www.youtube.com/watch?v=DkZ78Y_TiyA]

Do I have your attention now?  Good, because here is how you can help:

  1. Become a fan of 1GBforRVA on Facebook & write posts on their wall
  2. Find blogs that mention it and leave supportive comments (*ahem*…this one you’re reading is a good start!)
  3. Write a post on your own blog/Facebook/Myspace about why Google should pick Richmond
  4. Follow @1GBforRVA on Twitter and interact with them there
  5. Tweet about why you think Google should pick Richmond and reference @1GBforRVA at the end
  6. Find a local online forum and talk about the 1GBforRVA initiative. Start discussions
  7. Make videos about why Google should pick Richmond and post them online
  8. Talk to your friends and family about the 1GBforRVA initiative and encourage them to participate

It doesn’t have to be anything complicated, and maybe you just have time to leave a single comment here or on 1GBforRVA’s Facebook page, but even that will help.  Google is looking for an active online community that wants them to come here. (if you’re short on ideas for why Richmond is a great choice, check this out)

Let’s show them that Richmond can rally behind a common cause and that when we want something, we make it happen.

Ready? GO!

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Richmond loves its working moms

I think there are WAY too many lists out there, and they don’t mean much of anything to me anymore….well, unless Richmond ranks near the top, of course! Then I’m a sucker for the flattery and want to spread the news far and wide of how this prestigious award has been thoughtfully awarded to a well-deserved list of recipients.

Forbes has recently released a whole series of lists of the best cities in the USA for working mothers, each list covers the top ten cities in that particular category.  Mint.com then compiled some fancy graphics for each of the list, and I didn’t see a peep on any of it until a friend of mine at AgentGenius.com posted it in one of her posts. (so she gets the link and you can see all of the source info through her post)

Here is where Richmond ranked on the lists where we ranked. The others don’t really count, right?

  • #9 on Lowest Property Crimes
  • #10 on Lowest Violent Crimes

And Virginia Beach received a couple of rankings, too!

  • #10 on Best Quality of Schools
  • #8 on Lowest Unemployment for Working Mothers

Congrats, Richmond!!  (and all the rest of the cities, too….)

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Waitstaff in DC accused of stealing credit card numbers

This is a sad story about people taking advantage of trust given to them by the general public.  No, it's not about the government or big-business (this time), but about the trust that we put in the waitstaff at our favorite restaurants.

Six servers at high-end restaurants in Washington, DC, were accused of stealing credit card numbers from customers and selling them to criminals who used the numbers to create counterfeit cards and charge $750K worth of items at local stores. (See the full article from the Washington Examiner here.)

Secret Service investigators cracked the Washington-area scheme
after customers began complaining to their banks of unauthorized
charges on their cards, Secret Service Special Agent Philip Soto wrote
in a sworn statement filed in Alexandria’s federal court. Soto
discovered patterns in the charges that led him to the restaurants,
where managers helped him trace the stolen information back to specific
servers.

“Every employee has a unique
number they put into the register before ringing up a charge,” Clyde’s
of Gallery Place manager Paul Walker told The Examiner. “With that
system in place, we can point back to an employee very quickly. …
It’s very traceable.”

A few lessons to be learned and points to be made in light of this story:

  1. Watch your credit & bank accounts for odd activity. You can't catch what you don't see.
  2. Regardless of the poor example these servers have give, most servers are wonderful and extremely trustworthy.  Don't let a few bad apples make you disrespectful.
  3. As an industry, retailers and restaurateurs need to use systems to make the detective work easier (at least) and stealing private data harder (even better).

It's a shame that these stories happen at all, and with a bad economy people become even more desperate.  The best that we can do is show that this type of behavior will be recognized and punished, without over-reacting and only seeing the negative.

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Don’t be left out of these decisions — VOTE!

This is a big year for politics.  Yeah, I didn't expect that would be news to anyone this year, but it made for a good way to motivate people for this next call to action:  VOTE! 

It is important every year, and for every special election that comes up.  This year it is especially important because we are electing a new president at a very crucial time for our country and a new mayor to take charge of Richmond.  Despite your particular slant on politics, or mine for that matter, participation is key.

From the website of the Virginia State Board of Elections:

How do I find out if I'm registered to vote in Virginia?
   If you have questions about your voter registration status, contact your local county or city general registrar.  If you believe that you are registered to vote in Virginia, you can verify your voter registration status on-line from our website. 

 Where Do I go to vote?
   To determine your polling place location, contact your local county or city general registrar's office.  You may also get information about your polling place by using our on-line Where Do I Vote application.

 How do I register to vote in Virginia?
   Registering to vote in Virginia is easy and convenient.  To register to vote in Virginia, you must fill out and submit a voter registration application.   If it is determined that you qualify to vote, your local county/city general registrars will add you to the county/city voter registration database.  For more information about becoming a registered voter contact your local county or city general registrar.

On that last point, the voter registration deadline for the upcoming election on November 4, 2008, is this upcoming Monday, October 6.  Per the VSBE website, "Applications must be in the voter registration office or posted marked by that date."  Being this close to the deadline, I would suggest that you register either online or in person.

The second part is equally as crucial — when November 4th comes, get to your local polling place and vote!

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When legislators go crazy, but oddly harmless at the same time

File this under:  "Some people just have too much time on their hands."

A county in the state of New York is considering legislation that would require restaurants to list the prices of daily specials.  Apparently even that isn't going far enough for some folks, and these same legislators are tempted to require lists of prices for desserts, cocktails, and coffee.

I wonder when this same county is going to regulate the font on the menus and the quality of the paper that they use?

Has anyone else found this to be a problem in their restaurant experiences?  I can't think of an example where the consumer "needs to be protected" from not having a list of prices.

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Don’t mail that letter!

Usps_hm_ci_logo2
 Or at least don't mail it until you make sure you have the right postage.  On Monday, May 12, the postage rate for a first-class letter is going up by one cent, from $0.41 to $0.42. 

If you remember, the most recent change was last May when the rate went up two cents.  It's no coincidence that the rates are bumping up each May.  Legislation was passed in 2006, to implement regular and predictable price changes in postal rates, as well as revamping some of the management of the USPS. (Docket No. MC2007-1, Order No.43 — Order Establishing Ratemaking Regulations For Market Dominant And Competitive Products: Download FinalRulesWeb.pdf)

I linked to the full document for the legislation above, but for an easier-to-digest version see the comments from the Postmaster General: Download GuidingPrinciplesFinal.pdf

As far as the rate changes go, there are more changes than just the first-class postage, so be sure to review the rate schedule if you mail anything more involved than your typical letter.

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Getting shorted on tips?

We’ve all seen the rants about customers that don’t tip, or the customers that are so cheap that they don’t tip properly.  This post isn’t about rehashing those same tired complaints, even as unfortunately on-the-mark as they are.  (Anyone that has been a waiter or bartender can attest to the truth of those anecdotes.)

This is about tipped employees getting their fair share of what they have worked so hard to earn, and about keeping yourself out of trouble if you are a restaurant owner.  Starbucks just learned a $100M lesson in California, and employers everywhere need to take note.

If there is a shared tip pool involved, then only certain employees can participate.  Here is the section on tip pooling from Fact Sheet #15 from the US Department of Labor:

Tip Pooling: The requirement that an employee must retain all tips does not preclude a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), busboys/girls and service bartenders. Tipped employees may not be required to share their tips with employees who have not customarily and regularly participated in tip pooling arrangements, such as dishwashers, cooks, chefs, and janitors. Only those tips that are in excess of tips used for the tip credit may be taken for a pool. Tipped employees cannot be required to contribute a greater percentage of their tips than is customary and reasonable.

The basis of the argument in the Starbucks case in California was that shift-supervisors were sharing in the tip pool, which is against California labor law. 

In fact, a call to the Richmond District Office of the US Department of Labor verified that it is not California labor law that dictates this, but instead it is Federal law.  I was referred to the description quoted above, where only "waiters, waitresses, bellhops, counter personnel (who serve customers), busboys/girls and service bartenders" can participate in tip pools.  That’s not to say that other employees can’t be tipped, but they cannot participate in a tip pool.

Employers, take the lesson to heart before it costs you both in back-pay and legal fees!  (I’d like to point out here that I am NOT an attorney, but that’s why I called the US Department of Labor to get their opinion.  There are always gray areas, and that’s why there was a court case over this.  Check with your attorney to make sure you’re covered.)

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How Minnesota bars are still smoking-friendly

Despite the recent smoking ban legislation in Minnesota, some bars have fought the ban in a very creative way.  There is a provision in the ban that allows for participants in theatrical productions to smoke in restaurants and bars.  The bars are working around the legislation, legally, "by printing up playbills, encouraging customers to come in costume, and pronouncing them ‘actors’."  (see the full article on TheWashingtonPost.com)

Again, this demonstrates that there is a segment of the population that looks forward to smoking in public and they will go out of their way to frequent establishments that cater to their wants.  Those that prefer non-smoking restaurants and bars have demonstrated that there is also a market for their wants, as well.  The local market has responded with a number of alternatives for smoke-haters — and I think that’s wonderful!

I applaud the efforts of the Smoking Resistance in Minnesota, and I hope that their results are instructive to the rest of the country doesn’t fall on deaf ears.  Here is a quote from the article that demonstrates the desire for smoking establishments, and the harm that a smoking ban can do to the livelihood of anyone that gets in the way of the anti-smoking groups:

Proving anew there’s no business like show business, Anderson said her
theater-night receipts have averaged $2,000 _ up from $500 right after
the ban kicked in. Similarly, Bauman said revenue at The Rock dropped
off 30 percent after the ban took effect, then shot back up to normal
once the bar began allowing smoking again.

Here’s a message to the Virginia legislature regarding the *thankfully* failed smoking ban from this year and last year:  Keep your mitts off!  The free market is working in this case, and there is no need for legislative agendas/egos to get in the way of that.

So you don’t like smoke getting into your clothes? 
-Neither do I, but if I want to go to a smoky bar then who are you to say that I can’t?

Protection for the employees?
-Then why isn’t air quality the issue instead of what people are legally consuming?

I don’t really like special interest groups (then again who does unless they agree with you?), but on this one I hope the smoking lobbyists keep fighting the good fight.

I don’t smoke, and neither does anyone in my immediate family.  I don’t encourage smoking, but dammit it’s a perfectly legal activity.  If you can’t stand the thought of anyone smoking, then go for a full prohibition.  At least then you’re being honest.  (Not that I think prohibition would work, but it would be funny to see it tried.)

Thanks to Vivian J. Post’s blog for the heads up on the article!

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Make Virginia count!

Tomorrow is our chance to have Virginia’s voice heard in the presidential primaries, so get out and vote!

Here is the announcement that I received from Richmond Association of Realtors.  I think it sums up everything very well:

Don’t forget to vote in
the Primary on Tuesday, February 12! On the ballot are candidates that
qualified in Virginia for the 2008 Presidential Election. You may vote in
either the Democratic or Republican primary, but not both. At your
polling place, ask for a Republican or Democratic ballot.

Polling
places will be open for voting from 6:00 a.m. to 7:00 p.m. All qualified voters
in line at the polling place before or at 7:00 p.m. will be permitted to vote.

For
further election information, or to find your voting location, go to http://www.sbe.virginia.gov/cms/.

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New Minimum Wage Rate

Last Wednesday, the US House of Representatives passed a bill raising the federal minimum wage to $7.25 over the next 26 months.

$5.15  current federal minimum wage
$5.85  60 days after the bill becomes law
$6.55  1 year after the initial hike
$7.25  2 years after the initial hike

This is the first update to the federal minimum wage in a decade, although some states have enacted their own minimum wage rates that were higher than the current federal rate.

(Source:  House votes to raise U.S. minimum wage from Nations Restaurant News)

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Plight of the Independents

The ongoing struggle of the independent retailers vs. the big-box retailers is the focus of many blog entries (mine included).  There is a new entry ("Film traces struggles of mom-and-pop shops") on USATODAY.com’s Small Biz Blog that summarizes a movie by independent filmmakers Hanson Hosein and Heather Hughes.

The couples’ documentary is available on their website, and the trailer is on YouTube.  The trailer is very engaging, and I’m looking forward to sitting down later today to watch the movie.  Two former journalists trek across America to highlight the business of fighting against "big business" and "the corporate machine".

While they didn’t come through Richmond, don’t think that this doesn’t affect us locally.  If you don’t believe that, then just do some local searches on the battle from a few years ago in Ashland against the establishment of a new Wal-Mart.

Another recent example of the local reflection of this national issue is the VCU graphic design project put together the Fall 2006 semester that emphasized the benefits to the community of shopping with locally owned shops.  From the words on their own site:

ShopRVA is a coordinated effort to direct the public towards shopping
at local, independently owned businesses. This is not only to benefit
small stores. The act of buying locally allows cities to be more
self-sustaining and helps prevent intervention from corporate business.
Small businesses also add to the unique nature of the city by providing
services that cannot be found anywhere else in the world. Through this
campaign, ShopRVA hopes to provide incentive through education as to
why shopping locally is a wise way to give back to your community.

It’s a worthwhile project, and I hope it doesn’t die just because the class that put it together is over.  I have the feeling it will disappear with the tide of students that created it, but it is a movement that someone should take up.

Does anyone else know of local movements here in Richmond, or anywhere else, that falls in the same vein?

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Lessons from “Five Guys”

Five Guys Famous Burgers and Fries is a 120-unit chain that is based out of Lorton, Virginia.  They have developed a great reputation for fresh burgers (nothing kept frozen) and fresh-cut fries.  There are 8 locations total in Henrico, Richmond, Chesterfield, and Mechanicsville.

Yesterday, Nation’s Restaurant News did an "Operational Spotlight" on the chain to highlight how they keep their health standards high.  A lot of it had to do with the open kitchen (no hiding anything) and the risks inherent in using only fresh ground beef.

I especially liked this quote, and I think that all businesses can benefit from the wisdom:

In fact, if a customer notices something awry in terms of food
safety and cleanliness, they are encouraged to speak up. "We really
look to our customers to be our first line of defense," says
Chamberlain. There are signs posted prominently listing the number to
call for customer comments.

This is not a new practice, but the sincerity behind it goes a long ways towards making it work the way it is supposed to.  The signs for this aren’t hidden in a corner of the drive-thru window.  They are hard to miss, in fact.

We all ask for feedback (or at least we all SHOULD be), but how many of us are brave enough to ask for customers to call us when they notice a problem.  I know there are some that do, but we need to be sure to ask for it — criticism and all.

In light of that — please give me feedback, especially if you see me missing something, or screwing something up (but be gentle!).


 

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IRS Wages War on Small Businesses

According Business Week online, the IRS is amping up its focus on auditing small businesses, over and above the usual rate of audits system-wide ("The IRS Sets Its Sights on Small-Biz").

Everson, who’s serving a five-year term, says cracking down on small
businesses now will minimize the national deficit and avoid an eventual
tax increase.

I’m on the fence about this.  On one-hand, the "little guy" shouldn’t get away with tax evasion just because he thinks he will escape notice.  On the other hand, "avoiding an eventual tax increase" is a great rallying-cry, but the cost of these audits on thousands of "little guys" will eat up quite a bit of the recovered monies.  (whoops….just noticed they said that further down in the article — it’s stil true, though!)

"Pressure is being applied to find the money that they claim is there,
but what if it isn’t there? Think of the pressure which that puts on
the IRS to get tougher. You don’t want to be the person that gets
audited the day after that message goes out. It’s like saying ‘We
couldn’t find a problem, so find one,’" says Paul Hense, a certified
public accountant and chair of the NSBA.

I’ve always wondered about this phenomenom, but I think it’s just luck of the draw.  As they point out in another part of the article, the key is not to apply pressure to find what isn’t there.  Instead, the push should be to better qualify the audit targets before the audit is done.

In any case, it’s always scary hearing about the IRS on the warpath (or even politely knocking at your door).  It’s just another reason to keep your nose clean and be best buddies with your very competent accountant.

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News on Condos (not such a surprise)

Condos, condos, condos….  If you read this blog at all, then you know my viewpoint on the ongoing fad of converting everything to condos.  (and if you don’t, then just keep reading)

I don’t have a lot to say about it right now, but I wanted to point you to an article on MSNBC.com from a couple of weeks ago: "Scramble for affordable apartments" — and especially to this quote from the article about residential condo development:

In smaller markets such as Portland, Ore., Richmond, Va., and Omaha, Neb., demand has outpaced development.

I’ve been saying it for a while, but it’s nice to have something in the news backing me up on it.

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It’s a Landlord’s Market

As I’ve pointed out over the past several months, the residential leasing market has become slanted towards the landlords. 

This is a result of several factors, of course, including:
-the insane rate of condo conversions (see also: More about Condos vs. Apts, Condos reverting to apartments, Stronger Market for Apartment Investors, & New Hilton Hotel redevelopment of Miller & Rhoads)
-the slowing of the economy (however slight it may be)
-the increased mortgage rates (see also:  Residential rates highest since 2002)

The Wall Street Journal just ran an article about the shift in the residential leasing market.  Here is the synopsis posted by REALTOR Magazine Online:

Bidding War May Be Moving to Rental Front
The country’s apartment sector is seeing
more bidding wars as tenants jockey for available rental units in
increasingly tight markets.

Nationwide, rent for a 1,000-square-foot
apartment has risen 3.7 percent in the last year to $1,389 a month,
says Property & Portfolio Research Inc.

One of the main reasons for climbing rents
is the reduced inventory of units, created in part by developers that
built condos or converted rental stock into for-sale units during the
home sale boom.

In the second quarter of this year, rental
vacancy rates fell to 5.3 percent from 6.2 percent in the year-earlier
period. This has produced what is known as a "landlord’s market," with
companies like AvalonBay Communities Inc. raising their asking prices
and cutting concessions for incentives like a free month’s rent.

—Wall Street Journal, Christine Haughney (10/11/06)

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Tip reform coming?

Tipping practices affect us all — whether you work in the restaurant industry or you just eat in restaurants.  Everywhere you turn, people are giving their thoughts on how to tip, when to tip, how much to tip, etc…….

As a former waiter (and sometimes a current bartender), I know both sides of the tipping issue.  I’m not here to bore you with yet another rendition of "Server vs. Customer".  This is the place you come for news, and that’s what I have for you!

Yakup Ulutas, a restaurant manager in Atlanta, has founded a website (www.fairtip.org) to spearhead what he hopes will become a movement to tack on a mandatory 20% tip onto food service bills.

He believes this movement will be the cure-all for:
-servers being paid fairly
-the IRS being able to track tips earned for taxation
-the question of increasing servers’ minimum wage

Now, I understand the validity of the points Mr. Ulutas makes in his interview* with Nation’s Restaurant News.  The  idea of mandating  a tip percentage doesn’t sit well with me, though.  First off, I  don’t  believe that  it would work as legislation — that would be like a tax to subsidize salaries for restaurant employees.  Secondly, the variability of tips is what makes the  job financially rewarding.  It’s like any other sales-oriented job with commissions.  Sometimes you have a $300 night and sometimes you have a $20 night.  It just comes with the territory.

*in order to access the article, there is a short sign-in form — if you don’t want to fill it out, just take a look at www.fairtip.org

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Backlash Against Immigration

In a recent article in Realtor Magazine, Peter Francese (Ogilvy & Mather’s demographer) discussed several issues — which I shall touch on over the next couple of days.

The question that was the most striking to me first off was "What fallout do you see from the current backlash against illegal immigration?"  I completely agree with him saying that this is a backlash against all immigration, and that the result will hurt the economy in several ways.

I don’t think I need to remind anyone that America was founded on immigration.  We owe our economy’s entrepreneurial spirit to immigrants.  Immigrants come here to work.

I deal with business owners every day.  People that have taken an empty shell of a building and created something bigger than themselves.  Some are natural-born citizens, but most of these people have taken the biggest risk of their lives by coming from another country and starting over here.  Taking the much smaller risk of starting a business is nothing compared to that.

Francese doesn’t address the political ramifications of illegal immigration, and that’s not what I’m here to do, either.  If you want that, there are lots of people willing to spout their opinions on that.  I am merely agreeing with Francese that this recent sentiment and political rhetoric is not only affecting the illegal immigrants, but the entire recent immigrant population — and that is bad for business, and the economy as a whole.

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The Casual-Dining “Crisis”

Well, I guess it’s official. The print version (8/21/06) Nation’s Restaurant News had a 4 and a half page article on the "horrible, horrible" slump in fast-casual dining sales are compared to last year.

The article does point out, however, that while some national chains and independents are experiencing severe losses compared to previous years’ sales during the same period, others are experiencing record growth.

I think the real story here is:  "Consumers’ Dining Habits Have Changed".  Some styles of restaurants are benefitting from it and others are struggling.  Nowhere have I seen industry-wide numbers reporting a decrease in sales — and even if I had, not everyone reports their numbers.  (Not to discount the numbers reported entirely, but one has to keep in mind the limitations of statistics.)

It is no fault of NRN, or the other media that has covered this story, since the object to selling stories and publications is sensationalism (to a point).

It will be interesting to see if this trend continues, or if it is just a consequence of the high fuel prices.

(See also: Slump in Casual Restaurant Sales from 8-25-06)

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Independent Pharmacies Being Swallowed

By now, I’m sure everyone has heard the news that Rite Aid is buying the Brooks and Eckerd chain of drugstores, making it the largest chain on the East Coast.  If you haven’t heard the news, check out these stories:

USA Today:  Rite Aid to buy Brooks, Eckerd
RetailNet.com: Rite Aid confirms Brooks-Eckerd purchase
RTD: Rite Aid to buy Eckerd stores

Now that we’re all caught up on the news, let’s review the consequences underlying this big merger.  In this era of mega-supercenters (a la Walmart and Target), the little guy either learns to adapt and leverage the boutique concept, or they get squeezed out.  We have seen this over and over again in different retail industries.

This is being played out in the pharmacy sector, as well.  On USATODAY.com, the article entitled "Amid Rite Aid deal, independent drug stores ailing" summarizes some of the details that independent pharmacies totaled 47% of all stores in 1994, but they are now only 32% of the total stores.

The only independents I can think of in Richmond are the one on West Cary Street by VCU and Westwood Pharmacy.  Anyone else?

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Slump in Casual Restaurant Sales

USA Today posted a story today regarding the actions that the national casual chains (like TGI Friday’s and Applebee’s) are taking to combat the recent slump in sales.

I wasn’t aware of a national slump in casual restaurant sales, and I try to follow these things pretty closely.  It does make sense, though, with the overall slowing of the economy.

I am curious as to how this is affecting the local restaurants, but I haven’t heard anything through the grapevine.  The local independents would more likely chalk it up to the summer slump that is typical for Richmond.  (Richmonders tend to leave town for summer vacation at a rate that exceeds vacationers coming to Richmond.)

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Residential rates highest since 2002

We all know that interest rates are rising, between the Fed raising their rates and the overall market slowing down.  Every indication is that the housing market is not busting, but it is definitely slowing down.

See below for the USA Today article from yesterday.  The general concepts are certainly not news to anyone, but their comparisons to previous highs and lows are interesting.

Link: USATODAY.com – Rates on 30-year mortgages are highest since 2002.

Freddie Mac, the mortgage company, says rates on 30-year, fixed-rate mortgages increased to a nationwide average of 6.80%, from 6.74% last week.

That’s the highest they’ve been since they stood at 6.81% the week of May 24, 2002.

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Condos reverting to apartments

As USA Today reported, the recent cooling of the real estate market nationwide is causing the the buyers of condos to dry up.  Coupling that with the trend of converting multi-family housing to condos (which I see is still a hot trend in the Richmond market), there is a glut of condos available.

This is having two directly observable results:

  1. Rents are rising as the supply of rental units shrinks due to conversions to condos, and the demand for rentals increases as mortgage rates rise.
  2. Some developers are noticing the first result, and converting their condo buildings back to rental units.

(see also Stronger Market for Apartment Investors  & New Hiton Hotel redevelopment of Miller & Rhoads )

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WSJ.com – Arenas of Dreams: But Will Teams Come?

There was an interesting article on WSJ.com the other day that should resonate with anyone following the news in Richmond regarding the debate over the Baseball Park initiative.  This is an issue that cities across the U.S. are struggling over.

It would be interesting to see some kind of official reaction to this information from both/all sides of the local debate.

Link: WSJ.com – Arenas of Dreams: But Will Teams Come?.

But while arenas with big-time tenants may bolster a city’s self-image and quality of life, evidence shows they have a minimal economic upside. Most operate at a loss.

In "The Economics of Sports Facilities and Their Communities," published in 2000 in the Journal of Economic Perspectives, authors Andrew Zimbalist of Smith College and John Siegfried of Vanderbilt University argue that "independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development."

The authors cite several studies, including one by sports economist Robert Baade that found "no significant difference in personal income growth from 1958 to 1987 between 36 metropolitan areas that hosted a team in one of the four premier professional sports leagues and 12 otherwise comparable areas that did not." The authors’ conclusion: Arenas put a drag on the local economy by hurting spending on other activities in the city and boosting municipal costs such as security.

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Changes to S&P REIT Composite Index

Taken from a newsletter from the National Association of Realtors:

To provide a more accurate picture of the global investment landscape, Standard & Poor has changed the definations for several Global Industry Classification Standards (GICS) categories

and implemented new categories. Changes in the Real Estate Industry
Group include replacing the ‘Real Estate Industry’ with two new
Industries: ‘Real Estate Investment Trusts’ and ‘Real Estate Management
& Development.’ The new Real Estate Investment Trusts Industry will
see the creation of seven new Sub-Industries: Diversified REITs,
Industrial REITs, Mortgage REITs, Office REITs, Residential REITs,
Retail REITs and Specialized REITs. The new Real Estate Management
& Development Industry will include a Real Estate Management &
Development Sub-Industry. Standard & Poor is a leading provider of
independent credit ratings, indices, risk evaluation, investment
research and data.
   
      
Report compiled by NAR International Operations, narglobe@realtors.org.

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Stronger Market for Apartment Investors

As reported in the NREI, investors interested in multi-family housing have a strong market building.  The study cited focussed on the housing market slowdown in Southeastern cities, and how several factors are contributing to the favorable market for apartment owners.

The increase in mortgage rates is one factor that is slowing the residential purchase boom, and is consequently encouraging families to rent.

Another trend that I’ve seen in full force in the Richmond market is the effect of the numerous condo-conversions taking place simultaneously.

Another trend line that apartment investors should watch closely is
conversion activity, which has added strength to the rental market by
eliminating inventory. If the first quarter was any indication, the
conversion slowdown that began last October has carried into 2006: Reis
Inc. reports that roughly 30,000 apartment properties were converted
into condos during the fourth quarter of 2005, down from 50,000 in the
third quarter.

In effect, the slowdown of residential sales can be turned to the advantage of the wise investor.  Be on the lookout for good deals on rental units!

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The “New & Improved” J.C. Penney

T1_jcp_logoAs reported by the NREI (National Real Estate Investor), J.C. Penney has initiated a national drive to renovate existing stores and build new, free-standing stores as a way to increase earnings.

J.C. Penney is launching a major store upgrade program, based on the
strong performance of a new prototype. The 1,019-store chain plans to
spend $1 billion renovating 250 existing stores and constructing more
than 170 new ones by 2009, using a new, flexible “Box One” layout
formula. Company officials say 90% of the new stores will be off-mall.

…

On the renovation side, J.C. Penney is making over 50 stores this year and ramping up to 65 or 70 a year through 2009.

…

The new off-mall stores will be 80,000 sq. ft or 100,000 sq. ft., a
format the Plano, Texas-based retailer introduced with three stores in
2003 and fine-tuned at four larger stores opened in 2004. Using a
design strategy dubbed Box One, the combination of décor, aisle
spacing, adjacencies of departments within the store and other layout
factors is adaptable to a number of store sizes and will be used in
renovations and new construction alike.

With the outline from J.C. Penney, the Richmond market should not expect to see a "Box One" store anytime in the near future.  The renovation of the 4 stores in the area (Regency Square, Chesterfield Town Center, Virginia Center Commons, and Southpark Mall) are much more likely, even if it will be a few years in the future before they are slated.

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