Continue to Lease or build my own place?

[Reuben]

There is a national coffee and donut shop that is going to move in next door to me. I am seeing this as a double edged sword. The parking situation is a disaster now with the place vacant but the increased traffic could be additional customers for me.

There are 110 parking stalls shared by all of the tenants of the strip mall. 11 businesses plus the vacant location. A gas station/convenience store, a liquor store, a movie rental store, a pharmacy, a bakery/cafe, a hair stylist, a veterinarian, a tanning salon, a financial planner and a Dairy Queen. Each business has an average of four employees who use the parking.

There is a major cross road that has a traffic count of 17,000 cars per day going past the strip but the line of site to my store from the road is almost non-existent. There are severe restrictions for what type of signage is permitted. Many people come in and ask if the shop is new. We have been open over 7 years.

The current least is $3000 a month triple net for just under 1500 sqft. The lease has less than 2 years remaining.

The location I am looking at for a building sight is about one mile from my current location and would be clearly visible from all four ways at an intersection with a traffic light. The road is one of two major north/south roads in the city with a traffic count of 18,000 cars per day. There is a big push on in the area to attract new businesses and is being billed as an Italian style, walkable development.

Preliminary rough estimates on the cost of construction are in the $350,000 range. The construction timeline could fit in nicely with the end of my current lease agreement.

What are your thoughts?

 

[pizza_garden]

Since you’re well experienced, you’ve got the knowhow to create a very successful grand opening that could launch your new place into sales orbit.

Interest rates are low. If your city/market is not in economic decline now, you should be fine. I would say go for it.

You can have the layout you want for equal or less per month.

My only caveat would be to not build in a currently declining market, hoping for some economic recovery. That’s a recipe for disaster starting the end of this year and into next year, in my opinion.

 

[bodegahwy]

Aside from the original question, your landlord and tenants need to work out an agreement that employees NEVER park in the lot or at least that some minimium number of spaces are used for employees and these spaces are clearly identified and are the least useful spaces in the lot.

In our center, employees are not permitted to park in the parking in front of the building. In the back, each business is entitled to one parking space for every 500 square feet of retail space.

This can be done and it benefits everyone.

 

[royster13]

Building your own location has some risks but after many years of paying rent you do not have much to show for it…So if your business can support it, it is a smart move…I had a long time client sell their operation for asset value when a landlord chose to sell the building rather than renew their lease…

 

[Reuben]

bodegahwy:

Aside from the original question, your landlord and tenants need to work out an agreement that employees NEVER park in the lot or at least that some minimum number of spaces are used for employees and these spaces are clearly identified and are the least useful spaces in the lot.

In our center, employees are not permitted to park in the parking in front of the building. In the back, each business is entitled to one parking space for every 500 square feet of retail space.

This can be done and it benefits everyone.

This is close to the policy here but that is still nearly 1/2 the parking stalls. Public transportation is limited here and the climate for the most part is not conducive to any other type of transportation, so everyone drives their cars to work.

 

[bodegahwy]

So park farther away and walk. Using up parking to the extent that you are concerned your place suffers from not having parking for customers is nuts. Our employees at our downtown business park 2-6 blocks away.

 

[Reuben]

bodegahwy:

So park farther away and walk. Using up parking to the extent that you are concerned your place suffers from not having parking for customers is nuts. Our employees at our downtown business park 2-6 blocks away.

The problem is not with my staff as many of them live withing a few blocks of the store. The problem is a general lack of consideration by the general public. The trend is to park where ever they wish and use 2 or 3 stalls while they are at it. It is rare that the vehicles parked in front of my store are parked within the lines and usually are not my customers.

I have not done it but the temptation is to place one of these on the windows of the offending vehicles.

 

[Reuben]

pizza_garden:

Since you’re well experienced, you’ve got the knowhow to create a very successful grand opening that could launch your new place into sales orbit.

Interest rates are low. If your city/market is not in economic decline now, you should be fine. I would say go for it.

You can have the layout you want for equal or less per month.

My only caveat would be to not build in a currently declining market, hoping for some economic recovery. That’s a recipe for disaster starting the end of this year and into next year, in my opinion.

I am in oil country and the market is still on an incline all be it not as steep as it was a few years ago.

 

[Reuben]

The plot thickens I have just found out the doors to the coffee shop will be relocated closer to the adjacent wall. This makes the likelihood of no parking in front of my shop greater.