Real Estate Wholesale Property
Invest in Wholesale Property
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Apr 10, 2012, 13:10

Wholesale property naturally depends for its value not so much upon the amount of foot travel on the street as upon its convenience to freight stations, regard being had for both the receipt and shipment of goods. In some lines of jobbing trade convenience to the local retail stores is often very desirable. The former consideration is commonly by far the more important factor, as the transfer of goods to and from freight stations is a leading expense item in all lines of jobbing trade, and is always carefully considered by the experienced merchant. In western cities, where real estate values are low, it is common for jobbing houses to locate on some side track, thereby being able to receive and send out car-load lots at the warehouse, so as to wholly avoid transfer charges by simply paying a small sum per car to the railroad company for switching. The importance of this arrangement in the handling of heavy and bulky merchandise, such as agricultural implements, hardware, groceries, woodenware, carriages and wagons, cement, lime, tile, and very many other wares, can hardly be overestimated. In all lighter lines, however, this consideration is almost wholly ignored. Many lines, as dry goods, boots and shoes, millinery, drugs and druggists’ sundries, notions and small wares generally found in retail stores, pay great attention to prominent locations on account of the incidental advertising it gives, and also to the proximity to retail merchants and jobbing houses, on account of the house-trade from day to day delivered to messengers from these various retailers, who often keep a customer waiting till a messenger can go on a run to the jobber and supply the article demanded.

Owing to the very large area of land in most western cities well adapted to wholesale trade, the values of such lots rule low as compared with the best retail property, which is limited to a very narrow area. There is another peculiarity about property, suitable for wholesale business; that is, as a rule, the supply tends to exceed the demand. There is generally so much unimproved property in all cities well adapted to such purposes that owners are always reaching out for tenants by offering to build in any form the tenant may prescribe at a low interest-paying rental upon the total value of land and improvements, if a long lease of five to fifteen years can be obtained. This is true only in a slight degree of the best retail property, which the public in a very capricious way generally limits by its favor to a very small area in large cities, it being often confined to a very few squares on one or two streets. A retailer with an established trade is very loth to move even a few doors or from one side of the street to the other for even a much better building, for fear the old room may possess some advantage over the new in location which has contributed to his success and which the new location may lack, although apparently as good. Anyone familiar with the retail history of cities will recall moves of this kind made by hitherto successful merchants which proved disastrous. In modern jobbing trade, owing to so great proportion of the business being solicited by agents both locally and on the road as compared with the house-trade, the moving a few doors or even squares cuts very little figure, provided the general situation with reference to freight depots, switches, and local retail stores has not been radically changed.

Another weak point in wholesale warehouses is the danger, in case of losing a tenant, of long vacancy. In retail business the capital required is usually less, and in case of a failure of one firm, another is more easily organized to take its place; but the opening of a new jobbing house involves such a complete organization and so large a capital, facing a certainty of doing business at a great loss for a considerable period while a trade is being established, that a vacancy in a large building suitable for such business often continues for even years.

What is true of warehouses used in jobbing trade is measurably rue of large buildings used for wholesale commission business. We meet the same tendency to overbuild and the same losses from long vacancies in case of moving, failure, or discontinuance of business by the tenant.