In the past 7-Eleven was unique in the franchise world where you could make a comfortable living owning a single store and that was the major ownership model. McDonalds and other options at the time really depended on a multi-store ownership model. Corporate 7-Eleven (Southland Corp technically) moved away from this single store model in the mid to late 90's, instead preferring single, larger corporations in a region, owning 10+ stores over a single store owner. They made this happen over a 20 year span by changing the contracts franchisees sign and must to re-sign every x years. Every contract renewal drastically reduced the single store income and made it much harder for single store owners to make a living. Corporate also started preferring to give new stores to existing, large scale franchises over new store owners which changes the initial capital needed for a store by over 10x as with an existing store you will have to pay the rights from the previous franchisee instead of just the corporate.
My parents, grandparents, aunts and uncles all own or have owned 7-Eleven stores and have since the 80's. I've worked there, been to their conferences, and still get to hear about them at all family gatherings :)
I'll never miss an opportunity to promote this TED talk from James Kunstler[1]. It's a real pleasure to see a skilled hater take a vile trend to task and he does so with gusto. It's from 2004 and really feels like it, but the central points remain just as true today.
The article spends a lot of time describing problems that I would see as a result of car centricity and land use patterns, but it just fails to make a point on why it’s a problem caused by REITs.
You can easily go to NYC and find entire neighborhoods owned by large absentee landlords and yet are still walkable and desirable to live in. Yes perhaps regulations and tax laws favor large firms, but in the end zoning laws can easily require those large firms to build desirable neighborhoods.
I think part of the reason the US doesn't feel like the US anymore is that ownership of properties is no longer Bob who dreamed of some day opening a Pizza shop on Main st. It's all corporate now, all the way down.
Yup. Consolidation of the markets is ultimately what's destroyed small businesses. It's currently working on the likes of dentists and vets.
The US has devolved to the point where only someone with a large amount of wealth can start and run a business. You can't open up a small hardware shop anymore because no bank will give that loan and no supplier will give you the same wholesale prices they give to the likes of Home Depot or Lowes or heck even Walmart.
At every level in the supply distribution system we've seen consolidation and ultimately locking out of competition.
For example, here's why independent pharmacists have been going out of business [1]. We need new Theodore Roosevelt and Franklin Roosevelt anti-trust breakups to make capitalism work again. Capitalism can't work without a diverse competitive market.
Actually, 7-11 is a shrewd negotiator and will not invest anything over fixing something broken, and the landlord is not in charge here as these are all triple net. So it doesn’t matter who owns the land. But, yes, the corp running that business is thousands of miles away.
But the real issue here a that people stop at a 7-Eleven where if the same building in same condition said Bobs Convenience Store, they would not. We learned that decades ago.
They have a different culture and values, the US’s strengths lie in individualism and the character of the individuals that live here, and that’s both good and bad. But it’s entirely unsurprising that when responsibility and ownership is sharded up into trillions of tiny pieces and diffused that the outcome is awful.
In systems thinking, this would be called "intrinsic responsibility" (or lack thereof).
> Intrinsic responsibility” means that the system is designed to send feedback about the consequences of decision making directly and quickly and compellingly to the decision makers. Because the pilot of a plane rides in the front of the plane, that pilot is intrinsically responsible. He or she will experience directly the consequences of his or her decisions.
> It doesn’t seem like aviation became safer because pilots took risks
That's pretty much the job of test pilots even today. They are usually dual trained pilots and engineers/technicians, and their job is basically to QA new planes. In military aviation especially test pilots are often feeders into the astronaut program (a different but similar type of daredevil).
On the contrary, rules and regulations are written in blood, and airplanes are manufactured stronger in different ways because pilots took risks. The Wings don't shear off when the pilot yanks the yoke left and up because someone did before, and the Wings either fell off or didn't - but until it happened, the wings were an unknown quantity. And that's just one example.
That's basically the job description of a Test Pilot.
I want to see what the author considers a nice 7-11 for contrast, because it seems normal to me? Could be more walkable of course but I'm not sure that's on the REIT. They didn't lay out the roads or anything.
The wood paneling and nice front lights actually seem like an improvement over local 7-11s if anything.
By that logic, I also own a microscopic share in all sorts of businesses, many of which have their own sadness or disinterest.
Is there anything that makes real-estate significantly different, beyond how the pathos can be more-easily photographed?
In other words, I think a lot of the (real) legal/financial/incentive issues raised in the article have loose counterparts for other forms of investment.
> The shortcoming of such analyses is that they make it difficult to capture the value that would accrue to a project that created a neighborhood.
Sounds like an opportunity for experts in the field to develop and sell a good kind of analysis!
Though point-taken: It'd still be hard to attract cautious investors until something is perceived as "proven".
Pure market based solutions will never work and neither will restrictive planning policies. The only way to bring back real neighborhoods is to completely remove fixed zoning for direct neighbor votes or local councils deciding individual projects, and create a federal investment fund that will give cheap loans to builders who plan to do what the community actually wants.
Of course the root cause of this is wealth concentration, and that's not something you can fix with a couple new laws.
How is it wealth concentration? TFA claims the opposite - distributed ownership as the cause.
I agree with you about planning. Councils keep wanting to control how their neighborhoods look - because people who live there don't want their own stupid neighbors making their own decisions and "ruining" it. So they impose rules that lead to uniformity. Where I live, most new houses look indistinguishable from each other, but they all have the same multi colored offset walls with two different cladding types and alternating angles of their roofs. A style guideline made by the council to force them to look interesting.
So Vanguard owns one-eighth of ADC, an REIT whose stock price has declined 2.65% in the last 5 years. Surely there is space in the market for a smaller, leaner, possibly privately-owned REIT whose values more closely align with 2026 values and will one day be able to eat ADC's lunch.
CRE is a tough market right now, but you would think that a little bit of minimal creativity and effort could make an impact. I get annoyed with the overreliance on murals to provide faux authenticity, but even that is usually better than a bland box.
Zoning might be seen as a way of getting local control over property that’s actually owned by someone else, for better or worse. Developers often have to make concessions to local governments to get approval, and NIMBYism has its downsides.
A local government has options like creating a historical district if they really want to control aesthetics. A home owner’s association can control aesthetics in a residential area. They are just people and you might disagree with their decisions.
Real estate is expensive. Large commercial properties usually require rich owners. the local gentry that owns farms and car dealerships and shopping malls and fast-food franchises isn’t necessarily any more interested in aethetics than an REIT.
It seems like land-use governance is always going to be messy no matter how it’s structured?
seems like aesthetically it matches its surroundings. it doesn't seem like an outlier in the neighborhood which kind of defeats the premise of the article.
I think we're in agreement that commodification is often harmful, and should be constrained more than it currently is. It seems many of our fellow commenters are pretty enthusiastic about turning everything into a financial asset, though.
On the flip side: your retirement is dependent on the property listed in the article and if no improvements are needed while it generates a return…
It means you’re a landlord!
Congratulations!!
Give yourself a round of applause. By not maintaining it, you are electing to keep cash flow high and profits secured. The overall commercial market has negative numbers so even if said REIT is down 2.65% it’s hedged together with numerous properties in a nice geographic arbitrage opportunity to minimize losses.
I suppose that depends on whether you’re a human being who lives in a place or an investment portfolio. A lot of people seem to get confused about that, but as a human, I’d say I don’t love the outcomes here, personal portfolio performance notwithstanding, and might be willing to trade a couple points for a living environment that isn’t a soulless budget management exercise.
As a friend once noted, the great thing about living in America instead of Europe is that we make enough money living here instead of there that we’re able to take vacations in Europe.
A common saying is that in real estate, you make your money when you buy and when you sell, in other words not paying too much and timing sales to profit from appreciation. Cash flow from rent isn't a big part of it, that normally covers taxes, insurance, debt servicing, and maintenance but not a whole lot more.
True, but in exchange, “you” (meaning all of us) get to live out our lives and eventually our retirements in a bland, depressing facsimile of a culture.
"You" is 10-20% of the US population. The rest will never actually be able to afford retirement, and have no investments. 50% don't have an extra $500 in case of emergency.
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edit: Financial literacy is not alchemy. It will not turn nothing into something. The price of consumption has risen insanely (which is why investors have done well), and consumption when you're poor is not optional or luxurious.
There may not be a lump of labor, but there's certainly a lump of profit. 10-20% are getting it because 80-90% aren't. We've created a society (again) where the people who are most rewarded are the people who work the least (and whine about school lunches and shoplifting.) Owning things is the most lucrative job you can have; if you exclusively own and don't work, you've probably doubled or tripled your worth since covid. If you worked, at the lowest end you've barely kept your head above water, and at the middle end you've lost major ground. If you're either lower or middle, and you've accidentally reproduced (bad morlock!), you could be homeless after a single bad year.
With the high end worker is where you need financial literacy; but if you don't spend enough, how are you going to meet the people who will employ you or find you employment? Assuming they'll come to your small, somewhat comfortable apartment far from your workplace, attracted by your home haircuts and your cheap but comfortable clothes to have conversations about your used books, houseplants, and how hard your bicycle commute is, over one of your three board games - you've now moved the meter to 15-25% being able to retire one day. Congratulations, you're European.
Objection 1: Are you arguing that it's not 50%, but more like 40%? Because I wasn't attempting an exact figure. You gave me a median number that is under a Bronze plan's deductible. One concussion will bankrupt them. A childbirth will throw them into $10Ks of debt.
Objection 2: 50% report owning stock in a Gallup poll. Which I'm sure includes at least 60% saying "you mean some money in a 401K?" Temp services have 401Ks that some people have contributed hundreds of dollars to.
Maybe things have changed since 2022, but per the Fed's survey that year, the median American had $8,000 in transaction accounts alone (not unrealized stock gains, vehicles, houses, retirement, etc.). Because that's a median, 50% of the population had that much or more. By age cohort, the smallest median dollar amount was under 35s with $5,400, and the largest was 65-74s with $13,400
Those numbers are usually a bit iffy, but also retirement funds and emergency funds are separate things and you can have a retirement fund without a big emergency fund. If your plan for a rare emergency is "don't pay off the credit card in full for two months" then that's probably fine.
1. I’ll be in that cohort so yes, I hope it’d be around.
2. There is a cost of living adjustment matched to inflation.
3. It was supposed to supplement your retirement not fund it.
But I do agree it is on shaky ground with the current administration and the future of the US dollar in the world. The problem is, if I’m critical of it and it crashes, I get nothing. So why would I be critical of my own interest?
Do I have alternatives such as buying vanguard ETFs and minimizing risk? Yes, is that the primary vehicle? More assurance than social security, that’s for sure.
7-11's, which I frequent often, need a slightly higher food quality selection to appease affluents like me, but as far as how they look, that's what a 7-11 looks like! It's what I look for when I'm driving, on "stroads" / highways, and am looking for an exactly predictable experience, one which is low-key, inexpensive, and does not imply a formal dress code. I'd never want a 7-11 to look like a brownstone in the west village, that would imply an entirely different kind of business establishment.
This does seem like a fair criticism, the 7-11 style seems fine to me. (The food selection is much better in Japanese 7-11s, though.) When I see them they are usually in better shape than other nearby stations.
Small touches such as landscaping can really make a difference. For example, 7-11s at the beach often seem to put in a little more effort, although I don’t know if that’s the store or the landlord.
yes japanese 7-11s are exactly what i had in mind. a 7-11 that also has good quality sushi to go would be amazing. it's commonplace in bodegas in NYC (more the Asian owned ones) for example. that and, just one actual dark chocolate selection amidst the piles of low-quality milk chocolate M&Ms and hershey products. it's not a big ask.
The decline of the classic US fast food restaurants (McD's, Wendy's, BK) has been matched by gas station food getting better and better. The 7-11 breakfast sandwiches are pretty good these days and sometimes the hamburgers even taste like real meat :) .
As a frequent walker to the 7-11 in my "soul-crushing suburban district", I decided to look up the 7-11 landscape in Williamsburg, Virginia using the satellite view in Google Maps. Every single one of them is walkable from residential property.
My guess is the author lives in a densely populated urban area, and doesn't understand how "soul-crushing suburban districts" really work.
I've been walking to my 7-11 for over 30 years, and have gotten to know many attendants over the years.
It's certainly walkable from the hotels, and the houses/apartments to the north, but not the ones to the south as there's a stream in the way (see OpenStreetMap) but no footbridges.
The author has some valid points (i.e. people criticise business decisions made to appease shareholders without realising they may be the shareholders in a roundabout way) but chose some rather odd examples as proof.
Way to miss the entire point of the article. It’s not anti 7-11, it’s against underinvestment in local properties and lack of reasonable planning, driven by distant ownership.
I can also walk to a convenience store, in fact I’m fairly lucky with the amenities available in my neighborhood, but many places I’ve been (and previously lived) are disorganized and lack the livability of communities where the buildings have primarily local owners.
You seem really stuck on 7-11. The article is not about 7-11. That’s just the example the author used, and honestly the author could have picked a better one. Just imagine that they picked vape shops or something instead.
I have lived in places where you can’t walk anywhere useful because the absentee owners didn’t want to invest in finding good tenants. The buildings were fine, but partially empty, and there was even a shortage of local office space, so they could have rented at a premium with just a little bit of investment.
The linked letter has absolutely nothing to do with TFA other than a very tenuous link to Vanguard: It was written a founder who hasn't been in charge of Vanguard for several decades.
This is a stupid article. "Sad" is not an objective criterion. Is IKEA furniture sad? I think the author would say so.
I _love_ the pictured 7-Elevens, especially the one in Austin, TX. They are perfectly functional: you drop in, get whatever items you need, and get out in seconds. Everything is designed to help you with that.
The parking lot is a necessity for convenience stores because you likely won't invest 30-40 minutes of your time to _walk_ to a convenience store. You might as well just walk to a full-blown store. The exceptions are, of course, "food deserts" where the density death spiral has hit the bottom and made the city unliveable (see: Manhattan, Tokyo).
The places like "Captains Row" are beautiful to look at but hellish to actually _live_ in. Ask me how I know. They are the equivalent of the restored classic cars: beautiful to look at, but unsafe and uncomfortable for actual use compared to modern cars.
Absentee owners should be taxed out of existence. The distance between an investment and the people who understand it is a law enforcement liability (it encourages fraud), a public liability (it inevitably concentrates ownership who can easily lobby and get bailouts), and leads to missed opportunities and inefficient use.
The mass US real estate fraud that ended in 2008 was entirely built around loaning money to people who weren't creditworthy for overvalued property that they had no expertise to judge, then immediately selling that loan to somebody who would hide it in a complex product and immediately sell it again. Eventually, these was sold to municipalities and pension funds in complex gambling vehicles whose value would fall to zero if anything went wrong in this structure, after being branded "AAA" by institutions 1) paid by the people selling the products, and 2) literally written into legislation by name and into the rules governing the pension funds.
That's what distance between an investor and in investment gets you. Tax every single hop. Make them break themselves up.
edit: Yes it does. Tax them. These transactions cost the public more than direct transactions. I know that people feel like they're far beyond having to justify a tax other than "I like it, so don't tax it," but this distance in and of itself imposes costs to the public. If you dump money into Vanguard, and Vanguard then invests in an index, Vanguard gets taxed and you get taxed, too. Poof, no more Vanguard. The horrible outcome of that is that people understand the stocks they're investing in, and that the stock market becomes a repository of intelligence - which is what I thought was supposed to justify it.
Nobody cares about justice, though. They're libertarians when they're rich and revolutionaries when they're poor. Government to protect my stuff when I have stuff, government that gives me stuff when I don't have stuff.
My parents, grandparents, aunts and uncles all own or have owned 7-Eleven stores and have since the 80's. I've worked there, been to their conferences, and still get to hear about them at all family gatherings :)
[1] https://www.ted.com/talks/james_howard_kunstler_the_ghastly_...
You can easily go to NYC and find entire neighborhoods owned by large absentee landlords and yet are still walkable and desirable to live in. Yes perhaps regulations and tax laws favor large firms, but in the end zoning laws can easily require those large firms to build desirable neighborhoods.
The US has devolved to the point where only someone with a large amount of wealth can start and run a business. You can't open up a small hardware shop anymore because no bank will give that loan and no supplier will give you the same wholesale prices they give to the likes of Home Depot or Lowes or heck even Walmart.
At every level in the supply distribution system we've seen consolidation and ultimately locking out of competition.
For example, here's why independent pharmacists have been going out of business [1]. We need new Theodore Roosevelt and Franklin Roosevelt anti-trust breakups to make capitalism work again. Capitalism can't work without a diverse competitive market.
[1] https://www.youtube.com/watch?v=wmZtBW54GNI
But the real issue here a that people stop at a 7-Eleven where if the same building in same condition said Bobs Convenience Store, they would not. We learned that decades ago.
Workspace safety didn’t improve by blaming the workers, even though they bore the risk.
That's pretty much the job of test pilots even today. They are usually dual trained pilots and engineers/technicians, and their job is basically to QA new planes. In military aviation especially test pilots are often feeders into the astronaut program (a different but similar type of daredevil).
That's basically the job description of a Test Pilot.
The wood paneling and nice front lights actually seem like an improvement over local 7-11s if anything.
Is there anything that makes real-estate significantly different, beyond how the pathos can be more-easily photographed?
In other words, I think a lot of the (real) legal/financial/incentive issues raised in the article have loose counterparts for other forms of investment.
> The shortcoming of such analyses is that they make it difficult to capture the value that would accrue to a project that created a neighborhood.
Sounds like an opportunity for experts in the field to develop and sell a good kind of analysis!
Though point-taken: It'd still be hard to attract cautious investors until something is perceived as "proven".
Of course the root cause of this is wealth concentration, and that's not something you can fix with a couple new laws.
I agree with you about planning. Councils keep wanting to control how their neighborhoods look - because people who live there don't want their own stupid neighbors making their own decisions and "ruining" it. So they impose rules that lead to uniformity. Where I live, most new houses look indistinguishable from each other, but they all have the same multi colored offset walls with two different cladding types and alternating angles of their roofs. A style guideline made by the council to force them to look interesting.
A local government has options like creating a historical district if they really want to control aesthetics. A home owner’s association can control aesthetics in a residential area. They are just people and you might disagree with their decisions.
Real estate is expensive. Large commercial properties usually require rich owners. the local gentry that owns farms and car dealerships and shopping malls and fast-food franchises isn’t necessarily any more interested in aethetics than an REIT.
It seems like land-use governance is always going to be messy no matter how it’s structured?
It means you’re a landlord!
Congratulations!!
Give yourself a round of applause. By not maintaining it, you are electing to keep cash flow high and profits secured. The overall commercial market has negative numbers so even if said REIT is down 2.65% it’s hedged together with numerous properties in a nice geographic arbitrage opportunity to minimize losses.
Is that really… So bad?
As a friend once noted, the great thing about living in America instead of Europe is that we make enough money living here instead of there that we’re able to take vacations in Europe.
While I agree with you make money when you buy/biggerpockets quotes, you want cash flow to minimize holding costs.
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edit: Financial literacy is not alchemy. It will not turn nothing into something. The price of consumption has risen insanely (which is why investors have done well), and consumption when you're poor is not optional or luxurious.
There may not be a lump of labor, but there's certainly a lump of profit. 10-20% are getting it because 80-90% aren't. We've created a society (again) where the people who are most rewarded are the people who work the least (and whine about school lunches and shoplifting.) Owning things is the most lucrative job you can have; if you exclusively own and don't work, you've probably doubled or tripled your worth since covid. If you worked, at the lowest end you've barely kept your head above water, and at the middle end you've lost major ground. If you're either lower or middle, and you've accidentally reproduced (bad morlock!), you could be homeless after a single bad year.
With the high end worker is where you need financial literacy; but if you don't spend enough, how are you going to meet the people who will employ you or find you employment? Assuming they'll come to your small, somewhat comfortable apartment far from your workplace, attracted by your home haircuts and your cheap but comfortable clothes to have conversations about your used books, houseplants, and how hard your bicycle commute is, over one of your three board games - you've now moved the meter to 15-25% being able to retire one day. Congratulations, you're European.
Objection 1: Are you arguing that it's not 50%, but more like 40%? Because I wasn't attempting an exact figure. You gave me a median number that is under a Bronze plan's deductible. One concussion will bankrupt them. A childbirth will throw them into $10Ks of debt.
Objection 2: 50% report owning stock in a Gallup poll. Which I'm sure includes at least 60% saying "you mean some money in a 401K?" Temp services have 401Ks that some people have contributed hundreds of dollars to.
https://www.federalreserve.gov/econres/scf/dataviz/scf/chart...
The majority of people do have a safety net in social security. While it may not be enough, it is something…
2. There is a cost of living adjustment matched to inflation.
3. It was supposed to supplement your retirement not fund it.
But I do agree it is on shaky ground with the current administration and the future of the US dollar in the world. The problem is, if I’m critical of it and it crashes, I get nothing. So why would I be critical of my own interest?
Do I have alternatives such as buying vanguard ETFs and minimizing risk? Yes, is that the primary vehicle? More assurance than social security, that’s for sure.
But who knows what’d happen in 25 years.
Small touches such as landscaping can really make a difference. For example, 7-11s at the beach often seem to put in a little more effort, although I don’t know if that’s the store or the landlord.
The decline of the classic US fast food restaurants (McD's, Wendy's, BK) has been matched by gas station food getting better and better. The 7-11 breakfast sandwiches are pretty good these days and sometimes the hamburgers even taste like real meat :) .
My guess is the author lives in a densely populated urban area, and doesn't understand how "soul-crushing suburban districts" really work.
I've been walking to my 7-11 for over 30 years, and have gotten to know many attendants over the years.
It's certainly walkable from the hotels, and the houses/apartments to the north, but not the ones to the south as there's a stream in the way (see OpenStreetMap) but no footbridges.
https://www.openstreetmap.org/#map=17/37.282725/-76.711704
I can also walk to a convenience store, in fact I’m fairly lucky with the amenities available in my neighborhood, but many places I’ve been (and previously lived) are disorganized and lack the livability of communities where the buildings have primarily local owners.
It's just a 7-11. The charm is the walk and the experience.
I have lived in places where you can’t walk anywhere useful because the absentee owners didn’t want to invest in finding good tenants. The buildings were fine, but partially empty, and there was even a shortage of local office space, so they could have rented at a premium with just a little bit of investment.
I _love_ the pictured 7-Elevens, especially the one in Austin, TX. They are perfectly functional: you drop in, get whatever items you need, and get out in seconds. Everything is designed to help you with that.
The parking lot is a necessity for convenience stores because you likely won't invest 30-40 minutes of your time to _walk_ to a convenience store. You might as well just walk to a full-blown store. The exceptions are, of course, "food deserts" where the density death spiral has hit the bottom and made the city unliveable (see: Manhattan, Tokyo).
The places like "Captains Row" are beautiful to look at but hellish to actually _live_ in. Ask me how I know. They are the equivalent of the restored classic cars: beautiful to look at, but unsafe and uncomfortable for actual use compared to modern cars.
So, even if this is a problem, fixing it doesn't immediately make neighborhoods beautiful.
The mass US real estate fraud that ended in 2008 was entirely built around loaning money to people who weren't creditworthy for overvalued property that they had no expertise to judge, then immediately selling that loan to somebody who would hide it in a complex product and immediately sell it again. Eventually, these was sold to municipalities and pension funds in complex gambling vehicles whose value would fall to zero if anything went wrong in this structure, after being branded "AAA" by institutions 1) paid by the people selling the products, and 2) literally written into legislation by name and into the rules governing the pension funds.
That's what distance between an investor and in investment gets you. Tax every single hop. Make them break themselves up.
edit: Yes it does. Tax them. These transactions cost the public more than direct transactions. I know that people feel like they're far beyond having to justify a tax other than "I like it, so don't tax it," but this distance in and of itself imposes costs to the public. If you dump money into Vanguard, and Vanguard then invests in an index, Vanguard gets taxed and you get taxed, too. Poof, no more Vanguard. The horrible outcome of that is that people understand the stocks they're investing in, and that the stock market becomes a repository of intelligence - which is what I thought was supposed to justify it.
Nobody cares about justice, though. They're libertarians when they're rich and revolutionaries when they're poor. Government to protect my stuff when I have stuff, government that gives me stuff when I don't have stuff.