Tuesday, December 26, 2006

 

Because It Is So Crowded...



Everybody Goes There (with all due respect to Yogi Berra). When it's empty, it is not nearly as much fun. Once you're there, with lots of other people both like and unlike you, you want to shop, and have a drink or a meal, maybe go to the cinema, or a major art exhibit in the adjacent museums; and stroll, and window-shop, and people-watch. And the "everybody" that goes there are not just tourists, although the Champs Elysées is a "must" for visitors to Paris. "Everybody" includes people from all over Paris who want to see the latest films, major art exhibits, plays and musicals, or shop at the Virgin Megastore; people who work in adjacent office buildings, or come from far and wide because it is what it is.

Reading this article:




in Le Monde, I can't help thinking the situation described looks like a tragedy of the commons in the making. Although LE COMITE DES CHAMPS-ELYSEES has been looking after its interests and cared for this treasure since 1860 (chartered as an association in 1916 by Louis Vuitton), selfish landlords are becoming a danger the Comité may have trouble with. Whereas the Comité is effective at lobbying for improvements to the avenue itself, preventing "undesirable" tenants from moving in and otherwise managing the mix of businesses, it may have more difficulty preventing "desirable" tenants from being forced out by self-interested landlords.

The situation : the "public" resource in this case is the attraction of the avenue des Champs-Elysées in Paris, which generates high traffic (consumer/shopper traffic, not vehicle traffic, although there is that, too). Each landlord benefits from the traffic (750,000 to 850,000 visits on week-ends, according to Wikipedia), since the popularity of this avenue makes presence there valuable both for image and for sales volumes, whence high property values and unbelievably high rents. As in the "tragedy of the commons", a landlord benefits from charging the highest possible rental prices, but does not specifically suffer if he replaces a traffic-generator (such as a cinema house showing premiere films) by a low-image retail outlet one can find all over town (such as a discount clothing chain). The landlord's income may well increase, but the neighborhood suffers. Tough, says the landlord; optimizing rental income from my property is my priority.

In 1985, there were thirteen cinema houses; today there are only seven, and one (UGC Triomphe) is closing because its rent is being raised too high. Virgin Megastore's rent has increased during the past eighteen years, too, from 4% to 8% of its turnover.

France is often criticised by Hollywood for its protection of its film industry; in the past, for the protection of renters, there have been rent controls on apartments in Paris. Yet nobody seems to be suggesting rent controls today for "cultural" businesses such as cinema houses and Virgin Megastore (its "cultural" nature justifies its right to open on Sundays). Perhaps France's economy is more modern and "liberal" than its critics admit. If the closing of the cinema houses kicks off the downward spiral, will they (the foreign economic "advisors") be sorry the Champs-Elysées ain't what it used to be when they come to Paris for vacation?


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