Thrown Out of Business
Workers Find Office Contents Dumped at the Curb as Boom Times Skid to a Halt

By Anita Huslin
Washington Post Staff Writer
Monday, September 1, 2008

The owners are nowhere to be found when the sheriff's deputy shows up. The landlord is ready, however, and unlocks the business and tells the crew of 25 men to start removing the contents. Everything.

Out go the computers, copy machines, desks, cubicles, conference tables, paper-stuffed file cabinets, posters that say "Ask About Our Zero-Origination Fee Programs," monthly sales charts, coffee makers, plastic plants, a pair of women's shoes left under a desk.

In the back of the cavernous office, the movers find the remains of a nightclub/party room, with stereo speakers, flat-screen TVs, cocktail tables and what looks to be a dance floor. Behind the bar, a sign hangs on the wall with a picture of a palm tree: Club ReMax.

All of it goes, though not very far. About 20 yards, actually. To the grassy public right of way between the parking lot of this suburban Maryland office park and the street. The tenants had been warned by the landlord and the sheriff's office. But they didn't pay and they didn't move. So now they're out.

Stories of people being evicted from their homes after falling behind on their rent or mortgages are all too common these days. But these days, the end of the boom times is hitting businesses as well.

Nationwide, U.S. business insolvencies grew 44 percent last year, a rate that was expected to increase this year, fueled largely by real estate failures, according to Euler Hermes, a global provider of credit insurance to businesses that publishes an annual global insolvency index.

In counties like Prince George's, where the ReMax office was, nearly 10,000 eviction notices are filed by landlords each month. A fraction of them are businesses -- the exact number is not clear -- necessitating a visit by the sheriff's office.

"It's never happy when we're coming to your door," said Prince George's County Sheriff Sgt. Robert Bauer. "It's depressing to see businesses going down like this. But you have to distance yourself from it, so it doesn't get to you."

Each eviction tells its own story. There's the dentist's office that was put out after falling behind on rent; the owner left for somewhere overseas and hasn't been heard from since. The computer repair shop struggling with a $1,500 monthly power bill that was served notice of eviction this week. The barbeque shop that cleared out before the landlord could evict but hasn't found a place to relocate. A doughnut franchise that received eviction papers, and is trying to sell to someone who wanted to make a go of it.

On a recent weekday morning in Hyattsville, the only son of a local cabinetmaker came face-to-face with the end of his father's business. He watched, shellshocked, as a crew of 25 men carry the contents of his father's woodworking shop to the curb of an industrial park.

John Robey had worked there for more than 20 years, said Charles Wenger, his landlord. When Wenger stopped by the office to check on his tenant, he discovered Robey had died. A local police official said he died of natural causes.

"He was my friend," Wenger said before leaving. But, he added, "I didn't have any other choice."

Wenger needed to evict.

It took four hours for the crew to haul Robey's table saws, sanders, jigs and other woodworking equipment to the curb. A craftsman's tools, accumulated over a lifetime. When it was finished, Wenger locked the door of his now-empty space.

Once Wenger locked the shop, sheriff's deputies left. Then a flood of passersby began to stop and scavenge through the contents of the dead man's shop, throwing tools, furniture and half-finished projects into their cars and trucks, then driving off.

A relative stood and watched. He declined to give his name.

"There were just a few things I wanted to try to get," he said aloud. He shook his head as the contents of the business disappeared before his eyes. "Bad memories."

Vacancies in the Washington region's commercial real estate market are up, brokers say, though not nearly as much as in other hard-hit markets such as Las Vegas and southern Florida.

So far this year, 4.5 million square feet of new commercial office space in the Washington area has been completed but vacancy rates are on the rise, according to data compiled by Cushman & Wakefield. Ten percent less office space was leased throughout the Washington region in the second quarter of 2008, and most was composed of renewals, according to Jones Lang Lasalle, a property management company. In the Maryland suburbs, more space was given up by companies than leased, according to Cushman & Wakefield research.

Gary Michael, president of NAI the Michael Cos. and Michael Management, two longtime Washington area commercial real estate firms, said he expects to see more small businesses having difficulties, struggling to cover their overheads.

"If you're a consumer and you're not going out to dinner much, I think that small businesses are less capitalized and less able to handle it," Michael said. "It's a lot tougher for the smaller guys to borrow money if they need it to cover short-term cash flow hiccups. A lot of people used to rely on their homes as a source of borrowing and that has dried up."

At the recent eviction of the ReMax office, moving crews had been on the job for several hours before anyone from the company shows up. The owner, who identifies herself as an accountant, says that it was a paperwork mix-up; a misunderstanding between the landlord's office and the business about their move-out date. She does not want to talk about it and does not return calls later.

A real estate salesman arrives and sizes up the situation. People in cars, trucks and SUVs have stopped by the side of the road and are carting off furniture, equipment and office supplies.

He tries to make the best of a bad situation, helping the owner recoup some of her losses. Working through the growing crowd of people, he tells them that it's $5 for a file cabinet, $10 for a desk, $50 for a copy machines. On and on.

"Oh it's like a yard sale," one woman exclaims, before paying for a small bookcase, and asking another man to help lift it into her Ford Explorer. The principal from a local high school picks up a small wooden cabinet on wheels for $10.

This is generally how many businesses disappear; quietly and with little fanfare. According to U.S. Small Business Administration data, only two-thirds of all small-business start-ups exist beyond their first two years and within five years, half go belly up.

The real estate salesman, Charles N. Pemberton, whose card identifies him as a "multimillion-dollar producer" later explains the situation:

"If you have your brokerage set up where agents basically are paying desk fees or office space, and you have a large facility and not enough agents making business, you either have to find a way to boost sales, find some agents or look at the size of your facility, and think about going to a smaller location."

A corporate spokeswoman for ReMax said office consolidations are not uncommon in the current real estate market and asserted the D.C. region is still strong.

Pemberton, who has watched other brokers turn to bartending or other jobs, thinks the market will turn.

"Come back in a couple of months," he said. "We'll be selling more than filing cabinets."