location, location, location

I started chatting to several real estate brokers about 3 weeks ago on seeking out a location for the cafe. When it comes to commercial real estate, I am as clueless as your regular Bob. Here are a few things I have learnt over  the last few weeks:

  1. Lease space VS buying a business The location hunt is somewhat affected by business owners who want to sell their entire branding and chattles (new term that I learn, it refer to a moveable object that has not been “annexed” to the property in a legal sense) and on top of that, transfer over the current lease arrangements. For someone like me who want to start from scratch, it actually reduces the number of leasing choices I have as it roots out great locations with existing businesses.
  2. BIG names matter My thought has always leaned towards  having  the cafe somewhere in the Rosedale district of Toronto. However I found out that landlords in the popular areas are reluctant(and some even plainly state) that they will not entertain anyone who does not have a track record. Hence the stretch along Yonge are difficult locations to secure. I have to be prepared to fight against the big boys to get good locations.
  3. Lease rates range from cheap to ridiculous I have seen rates as low as $12/sq ft to $60/sq ft. To put it differently, this means for a space of 1000 sq ft, the lease will range from $1200 per year to $60K per year. It is a delicate balance to identify the right location to gain the business dollars, versus over-paying for lease without the business to sustain it.
  4. TMI This stands for taxes, maintenance, and insurance. The overheads does not stop after the lease payments and sometimes TMI could double the amount of money that are required for real estate.
  5. Luck & timing matters Leases are always constantly renewed or forfeited, and sometimes it is a matter of luck that allows you to spot, see, review and secure the right lease. For instance, I was considering Rutherford Market Place in Richmond Hill but even though it is still under construction, the lease opportunities are already gone.
  6. Parking spaces I personally do not like to stop at a location where it is difficult to find parking; this is particularly true during winter. Hence, outside of Toronto, it is not just the location selection for walk-in traffic but one must also consider whether people could park and come inside easily.
  7. Competition The landlord is right to protect their current tenants – this means no competing businesses within a small proximity.  Thinking of the number of   Timmies and Starbucks around, it is extemely tough to actually locate an empty store to set up shop.
  8. Demographics The Red Bulb cafe will appeal to folks who wants to have great coffee and healthy but delicious pastries. The location needs to have demographics that align with the concept and sometimes, the location is available but not the people and vice versa.
Bathurst and 16th

Visited this at Bathurst and 16th

I actually spend a few hours in Richmond Hill last Friday checking on a few locations but the stars have not exactly aligned like above.

Securing a location increasingly looks like the main consideration for Red Bulb Cafe, and hopefully we can get lucky and nail a location real soon.

Posted on
Tuesday, July 28th, 2009
Filed under:
Cafe Setup.

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