We Don’t Thank Heaven for 7-11

By the time we found out it was too late.  7-11 had signed a lease with the owners of the vacant retail space in our small, 37 unit residential building, and now our property values and personal safety are about to take a dive.

How did this happen?  Let’s start with the players:

• Gary Jacobs and David Levin, partners in the LLC who own the vacant retail space (and non-residents of Isbell Lofts)
• 7-Eleven, Inc. (a cast of characters so far including Jason Heffelfinger, Regional Market Manager, and Stephen Oliver, Senior Director, New Store Development)
• Isbell Lofts homeowners / residents (37 residential units plus one other owner-occupied retail space)

Timeline:

Saturday, April 17

Two days before the monthly HOA board meeting one of our neighbors happened to run into one of the board members in the hallway and found out that 7-11 will be moving into our building and that it will be discussed at the board meeting on Monday, 4/17.  This neighbor called a number of us to let us know so we can all be at the meeting to find out what’s going on, make sure the board understands the strength of the opposition, and to find out how we can stop it.

Monday, April 17

Eleven homeowners showed up at the board meeting to find out what was going on and to express our concern.  Gary Jacobs and David Levin, the men who entered into the lease with 7-11, were there as well.  To our surprise we found out the lease had already been signed.  Jacobs and Levin told us they had tried to find another restaurant after Pulcinella (the former restaurant occupant) left but that they couldn’t find anyone so they took what they could get.  To be fair, there is nothing in the building covenants (that we’ve found yet) that expressly forbids a store like 7-11.  However considering that every resident in the building is opposed to the move we find it under-handed that Jacobs and Levin entered into such an obviously controversial choice without running it by the residents first.  In fact, if our neighbor hadn’t run into an HOA board member in the hallway 2 days prior to the board meeting we would, in all probability, still be sitting in the dark.  Not a lot was accomplished at this meeting (besides some name-calling, shouting, and blatant disregard for the residents) other than the fact that Jacobs and Levin shared a few points with us:

1. The 7-11 store is going to be a new “urban concept” store.  (I did some research into these on the web.  All it means is they are a little cleaner, brighter, and may carry a somewhat different product mix.  However when we visited the new urban concept store on 17th and Welton we still saw Doritos, motor oil, and slurpees.  Frankly, not the sort of things the residents of Isbell buy.)
2. They told us the lease is a 5 year term with a 5 year renewal option.
3. They told us 7-11 told them there are no plans to close down the 7-11 that is already open one block away from us on 19th and Arapahoe.  (One of the homeowners at the meeting had gone into that 7-11 that weekend and spoke with one of the managers who told him the plan is to close the store in the next 18 months.  I don’t know if you’ve been in or around that store – but it’s not the sort of experience – see crime map reference a little bit further down – that makes any of us feel safe.)
4. When we asked if there was any way they could stop the process they said that even though they are under lease with 7-11 there are a few milestones along the way and they thought they could stop the process.  They would be willing to do so if the HOA would buy the retail space from them.  They weren’t prepared to give us a formal offer at that time but said they would get it to us within the next few days. 

After Jacobs and Levin left we talked about next steps.  We decided we would move forward with a letter and email campaign to 7-11 making them aware of the fact that they would be moving into a community that doesn’t want them.  We would also look at the buy-out proposal Jacobs and Levin planned to give us and take a vote from the homeowners. 

Sunday, April 25

An email went out from the HOA board to all of the homeowners with the proposal from Jacobs and Levin.  They asked for $1.2M from the homeowners in order to purchase the retail space from them.  Multiple realtors have told us this is too much for that space.  The homeowners voted down the proposal.  Everyone felt like it was blackmail.  We could either overpay Jacobs and Levin for the space (if everyone could even come up with the money in these uncertain times) or suffer 7-11 coming in and watch our property values take a nosedive.

That same day we launched a letter and email campaign to 14 executives at 7-11, including the CEO, to let them know the space was being rented without our approval, that the people in our building are not part of their target market, and that there are other buildings where they would see much more traffic with the right target (according to their Market manager the target market for their urban concept store is millenials).  Also, there is already a 7-11 just a block away from us.  (This store is a magnet for crime.  Check out the crime map at  http://bit.ly/9Lmwtl and you’ll see the largest concentration of theft, assault, drugs, and disorderly crimes in a 4 block radius is centered around that 7-11.)  Our hope was that we might give them true pause and get them to re-think this location.  We are 2 blocks off 16th and it really does get pretty quiet here on the weekends.  Unless you bring in a 7-11 that’s open 24/7 and sells tobacco and beer.

Thursday, April 29

One of our neighbors hosted a get-together where everyone could get an update as to what’s been happening and we could brainstorm creative strategies.  We had a few ideas.  One is that if 7-11 applies for a 3.2 alcohol license we will block it.  There were other ideas shared but mainly there was a lot of knowledge sharing since not everyone had been at the board meeting.  Mostly there were a lot of questions for which we had no answers.  We had some takeaways, one of which was to get more answers from Jacobs and Levin to see if they’d be willing to lease the space to the homeowners at their cost so that they weren’t losing money but not to ask us to help them make a profit off our increased HOA dues.

Tuesday, May 4

We received an answer from 7-11 (signed by Stephen Oliver) in response to the letter and email campaign.  He proposed a meeting at their new “urban concept” store at 17th and Welton to “talk about our plans and show the attractive aspects of our new locations”.  Many of the Isbell residents were opposed to the meeting because it was just a “meet and greet” meant to try to appease us with their shiny slushee machines.  We decided to take the meeting (since it was the only one we had been able to get to this point) but make sure the agenda was ours.

Tuesday, May 11

About 20 residents showed up at the 17th and Welton 7-11 during a pouring rainstorm to talk with 7-11 and get some answers.  Jason Heffelfinger, the Regional Market Manager, kicked off the meeting by introducing the 6 other (I dont think I’m skipping anyone) 7-11 folks in attendance, including Stephen Oliver, Senior Director of New Store Development, a guy in charge of loss prevention, a guy in charge of building out the new space, the franchisee of the 17th and Welton store, a district manager, and some other random guy (sorry random guy – I can’t remember what you do).

Poor Jason was in a little over his head.  He started to talk to us about the layout of the store and the product mix but we stopped him there.  The interior layout of the store isn’t going to affect our property values.  Carrying Funyuns vs. Tostitos won’t make us any safer when we walk home at night.  Having high ceilings won’t mean that the customers they attract at 2 AM to buy beer and cigarettes won’t pass out in our open lobby and be there in the morning for us to step over on our way out.  Here’s what we learned from 7-11:

• The lease of the space has been executed (10 year term with a 5 year renewal option which is different than the 5/5 that Jacobs and Levin told us) and they said there is no way they can back out of it without being in default (again, different from what Jacobs and Levin told us) 
• They did plan on applying for a 3.2 alcohol license.  We told them we would oppose it.  Stephen Oliver verbally agreed not to pursue it.  (We shall see if 7-11 stands by this verbal committment.)
• They plan on being open 24/7 although they would be willing to negotiate that.
• They said they have no intentions of closing the store one block away from us on 19th and Arapahoe but that they are at the mercy of a year-to-year lease (this is not what one of the store managers told us).  They said they don’t see any reason not to have two 7-11 stores so close to each other and that they do not think they will cannibalize each other.  They plan on seriously expanding in Denver.  They also said the reason the crime and customer experience at the other store is so bad is that they are close to a couple of homeless shelters in addition to being located in a rent-controlled building across from the bus station.  We of course pointed out that our building is one block closer to the homeless shelters so if they open a store in our building than by their logic that clientele would shift to our building.
• We asked what additional security they had planned for our building (especially noting we have an open lobby and a parking lot).  At this point the gentleman in charge of loss prevention stepped in and said “None.  You live three blocks away from two homeless shelters.  What do you expect?”  So their plan is internal security cameras and that’s it.  No patrolling of the parking lot or our lobby, into which they will be drawing much more traffic.
• At the beginning of the meeting Jason Heffelfinger started to talk about how important community is to 7-11 and that they have many community outreach programs.  We asked “How does it feel then, to know you are entering a small community, a much smaller residential building than you usually do, and that no one wants you because of the negative effect you will have on our property values and safety?  This community doesn’t want you.”  He had no answer.  Stephen Oliver basically said it’s too late and they won’t default on their lease.  Our takeaway is that 7-11 doesn’t really care about community.

That’s the story to date.  There’s more to come.  Stephen Oliver agreed to a second, smaller meeting to talk about things like safety, hours of operation, and other things that will need to be addressed if they move it.  They haven’t even started building out their space yet and it wouldn’t take much for them to find another location that’s better suited to their needs.  Already they have caused dissension in our previously close-knit community where almost everyone knows everybody else.  Some homeowners are starting to look at moving out before our property values drop.  (Multiple realtors have told us that the second that 7-11 sign goes up our property values will drop 10-20%.)  I realize that ultimately Jacobs and Levin are the bad neighbors for bringing in 7-11 in the first place.  But now we are asking 7-11 to follow through on that committment to community they talk about and go somewhere else where they will be welcomed, where people love their slurpees, and where ultimately they will make more money.

Stay tuned for the next installment in the 7-11 saga.  The next board meeting is tomorrow night.

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