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I-1100 and I-1105 impacts CRE September 23, 2010

Posted by Erik Swanson in Articles, Research/Data, Retail News, Uncategorized.
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The battle for who will control liquor sales is heating up and  players on all sides of Initiatives 1100 and 1105 are pouring money into the fight. Yesterday, The Seattle Times’ Melissa Allison provided a good look at the most obvious winners and loser’s in her article “Inside the liquor battle: who’d win, who wouldn’t . She also touches on the potential impact on operators and landlords with WSLCB leases…

The entrepreneurs who run almost half the state’s 315 liquor stores are worried, too. They do not own the inventory in their stores and are unsure whether they could afford to buy it from the state, much less compete with grocery and other stores selling liquor.

We try to keep this blog non-political so I won’t take a position (at least in this forum). From a real estate perspective however, it’s a bit concerning to think that upwards of 300 WSLCB leases could be terminated. “How is that possible” you ask? WSLCB leases that I’ve seen contain a provision that states,

…in the event that the enactment of any law or the decision of any court of competent jurisdiction shall prevent either party hereto from complying with or carrying out the terms of this Lease; or in the event that the operation of a liquor store upon the above described premises is made unlawful as the result of an election held under RCW 66.40, then this Lease shall terminate and the parties hereto shall be released from any and all liability…

Ouch.

I haven’t seen any polling data and the November outcome on I-1100 and I-1105 anybody’s guess.  Also uncertain is how the State will dismantle the system if this legislation passes. How much notice will landlords have before the rent checks stop? What will happen to the inventory?  Lots of questions remain. What is certain is that retail landlords don’t need more 5000 sf “holes” to fill…Hey can you pass me that bottle?

 

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