Seeking Reliable Real Estate Businesses, Investors Give Laundromats A Spin
Coin laundries have long been one of the few recession-proof businesses. After all, we all need to do laundry. There’s debate as to whether the recession-proof nature applies even during a pandemic. But it’s not deterring some from opening new laundromats, at a time when cash is tight and more landlords are installing in-unit washer-dryers.
It appears the onset of Covid-19 has been a double-edged sword for the coin laundry business. On one hand, the pandemic has spurred many motivated by health worries to more frequently clean clothes they believe may have been exposed to the virus. On the other, the economic fallout from coronavirus has fewer coins jingling in the pockets of would-be customers. Some observers have suggested that has meant more former coin laundry-using renters moving back in with parents. Other consumers have no doubt reduced the number of trips they make to the local laundromat, not only to save money but to avoid exposure to the virus in an indoors setting.
Uncowed by Covid
One company apparently undaunted by the pandemic is PWS Laundry, which is looking to open 30 to 50 new locations across the U.S. between mid-2020 and next summer. “Our company has been around for generations,” said Brad Steinberg, co-president of Los Angeles-based PWS, noting the enterprise started in 1968 when his grandfather and two partners launched their now more than half-century-old business.
Over the years, its owned-and-operated laundromats have gone by such brand names as Launderland, Sudz and the most recent brand moniker, SpinCycle Laundry Lounge. Its modern laundromats are known for up-to-date fixtures and finishes, energy efficiency and positive patron experiences.
In addition to developing state-of-the-art retail laundromats and selling them to independent operators, PWS is the nation’s largest distributor of laundry equipment and parts for laundromats, commercial laundries and multifamily landlords. Financing and brokerage are additional components of the PWS business model.
“My business partner, Brad Pollack, is a second-generation owner and we both see an incredible opportunity to accelerate the development of new laundromats,” Steinberg says.
What would make this a good time to look at this business type? According to Steinberg, the factors include a growing cohort of renters, who of course comprise the largest segment of the self-service laundromat business. Another is the availability of opportune retail real estate locations, especially given the failure of many retailers this year. Given the decline in many commercial property owners’ fortunes during the pandemic, some owners may offer greater flexibility to cover cost of build outs.
From landlords’ perspective, the benefits include steady demand for operating businesses on the part of eager entrepreneurs. Laundromats are also long-term, stable tenants, and their steady business can bring substantial foot and vehicular traffic to shopping centers.
Despite the freshly-washed lingerie known to emerge from laundromat washers, there’s nothing sexy about this business. Still, Steinberg finds it hard to fathom a more pleasurable career, or a more dependable business for a neighborhood shopping center. He says they are stable, consistent performers operationally. They are resistant to recession, virus and Amazon
A Los Angeles baseball fan, Steinberg recalls leaving his home hours before first pitch at Chavez Ravine, a move letting him and his parents “touch all the bases” along the way. “We would leave for a 7 p.m. Dodger game at 10 a.m., so we could stop at 20 laundromats on the way to the stadium,” recalls Steinberg, who spent part of his career in investment banking. “As much as I loved banking, this was always my true calling.”