Philadelphia e-bike seller gets his rent tied to gas price

When it came time recently to renew the lease for his electric bicycle store in Mount Airy, Afshin Kaighobady had an idea. Knowing that the demand for his product spikes when gas prices are high, Kaighobady convinced his landlord, Pam Rogow, to tie his rent to the price of crude oil.

"It just came to me," Kaighobady said.

Kaighobady owns Philly Electric Wheels, or Phew! for short, at 550 Carpenter Lane, near the corner of Carpenter Lane and Greene Street, where a handful of environmentally friendly stores have popped up.

"When the weather is good and the price of oil is high," Kaighobady said, "it’s in direct relation to the selling of bikes."

So he agreed to pay more for rent as the price of crude oil goes up, and Rogow agreed to take less as it goes down.

"It was a funny, clever argument," wrote Rogow, who owns the "Green on Greene" building where Phew! operates, in an e-mail. "At first we weren’t sure if we were serious," she said. "But yes, we were."

Kaighobady and Rogow settled on a baseline of $1,000 rent per month. The rent price will fluctuate according to the percentage above or below $80 a barrel of oil. So if oil goes up to $100 a barrel — a 25 percent increase — the rent will go up to $1,250 a month. If the price of crude drops to $53 a barrel, the rent would drop to $625.

Last year, the price of crude averaged $53 a barrel. In 2008, it averaged $91 and went as high as $126.

Kaighobady opened Philly Electric Wheels in October 2009. The store carries 30 different electric bike models from nine different manufacturers. The least expensive model is $550, and it has a battery that can stay charged for up to 10 miles. Kaighobady says his bikes are good for commuters going from Mount Airy to Center City, a downhill ride, because the electric motors help them get up the hills on the way back home.

And even though a rise in the price of crude oil would mean he has to pay more for rent, Kaighobady actually hopes the price keeps going up.

"All the [bike] distributors talk about July of 2008," Kaighobady said. That month, the price of oil was $126 a barrel, and many bike sellers did a brisk business. "They call it the golden month," Kaighobady said.

Read the full story in the Philadelphia Business Journal.