Out of Business in Key West - It's an Ongoing Event

There are two things certain in life:  death and taxes.  If you own a business in Key West, there is a third certainty; it ain't easy owning a business in Key West!

Before I ended up buying my first place in Key West, I did the same thing a lot of tourists and potential buyers do while visiting town - I would walk up and down Duval Street during the day and sometimes the night. I wouldn't necessarily walk the whole mile between the Gulf of Mexico to the Atlantic Ocean, but I would walk enough of it to get a sense of the state of the economy.  I recall seeing many vacant store fronts. It made me uneasy about the economic viability of this town.

A couple of days ago I passed by a store at the corner of Duval and Petronia Streets. You all know that location. It's where the gay cross walks are - the passage way between the 801 Bar and Bourbon Street Pub.  (A woman tourist paused before going across the painted crosswalk to give me time to take the photo. Town is not as deserted as the photo might suggest. It was just plain hot out. 90 degrees in the shade. Not fit for man or beast or Realtor in search of something to blog about.) Thousand of people pass this location weekly. Thousands!

That storefront is vacant. It is one of eleven storefronts on Duval Street that are empty.  Many of these places stay empty for months and months simply because the landlords demand outrageous rents - rents comparable to what one might pay in New York City.

I have told this same story before. It's just the today I have a great photo to grab your attention. Key West has a couple of million visitors each year who walk up and down Duval Street. Many are boat people, passengers from cruise ships that dock here for a few hours. Most of these passengers will spend a part of their time walking on Duval Street and most of those will walk five or six blocks from Sloppy Joe's toward the Atlantic. Most of the rest are returning visitors who fell in love with our island home.  Having a storefront with something to sell and thousands of potential buyers passing your door each day is why the rents are so high.

Here's the thing there are many vacant store fronts on the streets that run perpendicular to Duval. And there are a lot of vacant spaces at the three shopping centers in Key West and even more in the strip centers along North Roosevelt Blvd. and Flagler Avenue. These places don't get the same high volume foot traffic, and they don't charge the exact same high dollar rent, but the rent they do charge is proportional and their rent strategies are exactly the same: choke the tenant.

I have never understood the business model of holding out for more money. I would rather have a tenant paying cash now rather than one who would pay more in the future if they can make a living after paying rent, cam fees, taxes, wages, FICA, and cost of goods or food. Compound the cost of opening the door with not having workers willing to work. A studio apartment will cost $1200 to $1500 per month. Shop girls making $10 an hour can't afford that. Nobody can. It's a system doomed to failure.

A couple of years ago I had a really sweet couple from Italy who wanted to move here to open a small concept restaurant on Duval Street. I found them space they really liked. But after they did their numbers, they concluded they couldn't make it. I was happy for them. The last thing I would ever want to do is to be lure someone into a bad investment in Key West. So many of the people who come here with a vision leave here with empty pockets and broken dreams.

The empty storefronts that made me question the stability of Key West thirty some years ago still exist. The places get rented and re-rented, and re-rented again as people with dreams come here, invest here, and many leave here broke.