Article courtesy of Real Estate Board of Greater Vancouver, Commercial Market News, February 2012

The BCREA Commercial Leading Indicator (CLI) rose for the second consecutive quarter, advancing 1.1 points to an index level of 111. On a fourth-quarter over fourth-quarter basis, the CLI moved 1.6 per cent higher in 2011. While this is a marked slowing from the 5.2 percent surge in 2010, the index picked up considerable momentum in the third and fourth quarter of the year, more than making up for a weak first half of 2011.


The trend in the CLI turned up slightly as early softness in economic activity was smoothed out by a stronger second half of the year. This change in trend indicates a positive economic environment for the BC commercial real estate sector in 2012. “Improving economic data provided a strong tailwind for the CLI in the second half of 2011,” said Brendon Ogmundson, BCREA Economist. “However, growing anxiety surrounding the global economy could constrain the economic environment for commercial real estate this year.”The full BCREA Commercial Leading Indicator index is available at: www.bcrea.bc.ca/docs/economics-forecasts-and-presentations/clireport.pdf

Francine Tracey

604-961-6550

 
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Audrey McKinnon

A group of Denman Street business owners are giving their landlady seven days to reconsider their disproportionately high rent or they may have to leave the building. They are requesting that she agree to fair lease rates and longer lease terms.

 

"We're fighting for our block," says Joseph Mireault, Eyeworx owner since 2007.

 

The business are located between 1110 and 1124 Denman Street. Landlady Elaine Owyang, who could not be reached for comment, charges from $78 per square foot to almost $120 per square foot, depending on the business, while market value in the area is $50-$65 per square foot.

 

"In my opinion that's way above market," says Colliers commercial realtor, Sherman Scott. He adds that more mindful landlords will charge a low enough price in order to keep long-term tenants. But Scott says that high rent is not the only factor of business failure. Inexperienced business operators might be tempted by Denman's high profile, but aren't prepared to run a business successfully.

 

The beach side block has three commercial spaces for lease. Roentgen, a clothing store, Qoola Yogurt & Fruit, and Cookies by George were all occupants. Qoola closed on September 25th "due to the incredibly high rent" according to the moving notice posted on their door.

 

Mireault, who says that the street has been labeled "Deadman Street," says that after rent and taxes, there's nothing left for business operators. "If tenants are working and the money that they're making only covers . . . property taxes, operating expenses, rent there's nothing left over for you . . . You're working for the landlord," says Mireault.

Falafel King, for instance, would have to sell close to 750 shawarmas a day to cover nearly $6,000 in rent plus operating costs for the 500-square-foot space.

 

Mark Kenna is the former owner of Obsessions, which previously occupied the corner building two years ago before Roentgen. He says Owyang was unwilling to negotiate and wanted to increase rent by 30% before the Olympics while Kenna and his business partner had been struggling to keep their eight-year-old business afloat.

Obsessions went bankrupt as a result. "We should have gone to arbitration for it, but we just had so much on our plate," he said. Nobody in the building has gone to arbitration yet, which is the primary legal recourse available to commercial tenants in this situation.

 

"When she turns on you, she turns on you," said Kenna, adding that Owyang would refuse to speak English during a disagreement. He thinks the rental issues are not just a problem for that building alone and believes that the entire street suffers for it.

 

But Nariman Moshfeghi, Pit Stop owner, notes that many of his neighbouring businesses two blocks west have changed ownership up to eight times in the 14 years his store has been in business. He blames it on high rent and slow sales from late October through February. "Two to three months, you barely make your rent," Moshfeghi says.

 

"If it's cold nobody comes out." Robin Delany, who established his first Delany's Coffee on Denman Street over 18 years ago, says that the location is the most seasonal out of the five Delany's he has opened. He says the rent is also a challenge for all businesses in the area: "We're paying less than across the street, but we're all paying a lot."

 

"It's a big joke," says 17-year Delany's employee Barbara Wychopen. "How long will they last? We always ask that question.

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