Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1919-06-30
RENT PAID ON BASIS
! OF STORES EARNINGS
Plan in Vogue Here Establishes
Cooperative Leases to Aid
Tenant and Landlord
SCHEME PROVES SUCCESS

InllHQelDnld DuelutSS uCulhthf mhiNh
developed the irredeemable ground rent,
that life sentence on the head of the
real estate investor in the days of the
founder, has atoned for that centuries
old preventive of property development.
A form of CO. operative lease, under
which some of the most prosperous
chain store and other business concerns
occupy their stores in the liveliest sec
tions of the city, is proving alike re-
munerative to tenant and landlord, Mt
the same time drawing TO those buster
centers with their higher rentals firms
which. under the old line leases, never
would have been able to invade the
areas in which they now prosper and
expand.
At the same time it is claimed for
this Philadelphia idea that 1t helps
property adjacent to the stores en-
toying it's benefits through the added
business brought to the region. Neigh
borhoods that begin to show signs of
lethargy have been saved from the
ultimate decay and Quickened into new
life by the injection of a different type
of up to date trade that makes mer-
chant and customer sit up and take
n0tlce, Win muludlly DeHeuCldl result
Plan Born Here
SO far as known, the project has not
vet been introduced into other cities,
save in cases where its successful oper
alton here has induced firms doing busi-
ness under its terms to obtain similar
contracts in localities beyond Philadel
phia where they occupy buildings.
70 fhn ORIGIN nf tba
plan. il may be summarized as a gam
BILE on the part of the realty owner
Under the cid leases he named a fat
rental, payment and continued occu-
.pancy depending entirely upon the ten
ants ability to meet the terms stipu-
lated. A tenant doing poor business
might default or leave a property empty,
perhaps to become a neighborhood eye
sore.
By the modern lease landlord and
tenant, while not partners, share in
the increased value that comes with
growing business. and both are salts
fed with their bargain. Many big stores
along Market and Chestnut streets are
occupied today under this contract, both
parties enjoying expanding revenue
from the investment.
As explained by one of its originators
the lease has as its basis the business
proposition that property for rental
purpose, as we'll as assessment. should
be rated upon it's value per foot front.
II was also felt that a man is entitled
to a definite return upon his real estate
investment. regardless Of what other
similar properties in the same neigh
borhood might yield.
Records Broken
Oftentimes this idea shattered all
rentals previously paid in a given sec
ton, Unless a man can make money
he cannot pay his rent. was one of the
cardinal beliefs. Business for the real
estate firm is due to the good will of the
tenants and to keep this good will stores
where they could make money had to be
supplied.
The firm which originated the plan,
several years ago tried TO rent to num-
ber of chain store concerns central To-
cations at rentals which, it was felt,
the sections were worth. This is par
ticularly true of Second and Market
streets, where the United Cigar Stores
Company was induced to locate under
a one year lease. 1t was agreed that
per cent of the business done should
be paid as rent. The owner said
representative Of the realty firm, felt
as we did. that the property would show
a good return. That year we got WITHIN
couple of hundred dollars of what hac
been asked under the original five year
lease. When the yearly lease was ur
they asked what the rent would be un
der a term lease. The section was a!
good as we had said it was, even bet
ter, We sent them a lease, blank as II
rent. They sent it back with the regula
rental twice what had been paid unde
the percentage basis.
''After this experience we though
we would try again. We made lnvesti
CATION of the leading merchants of tn
country, ascertainirg what percentag
of their business expense they coul
nay in rent and still make money
Their replies varied from to 20 pc
cent.
Drug Stores Are Lowest
Drug concerns and five and ten Ger
companies were the lowest; milliner
and candy stores the highest. We foun
many instances where owners willing
gamble on the value OF their propert
on a percentage basis would gain tV
or three times the average rent.
'In most instances progressive me
chants were wiling and anxious to ent
into these percentage leases and o.
entire experience has been that a
solutely none has failed to work out.
IAN sections of the city are affect