Wednesday, June 16, 2010

The Wackiness of Combining Faith and Commercial Real Estate

When a faith venture starts to look for commercial real estate, it's going to be messy.

At least that's been my experience over the last 11 years at Belay Enterprises. For some reason--and it has something to do with combining faith and real estate--I have all sorts of crazy stories about trying to secure space for our various projects.

There's the time we started moving into a new warehouse for Bud's Warehouse after completing a lease agreement only to discover that one of the neighboring tenants had a first right of refusal on the property.

And he wasn't a very nice person.

So we moved on and discovered an even better space which we still inhabit to this day.

Over the years at Bud's Warehouse, I have often joked that we have made a habit of preceding future loft developments. We have had to move from two prior warehouse locations because of the development of lofts. Bud’s moved from another location because of the development of a business complex. A few years back, our Baby Bud's project closed operations at the Colfax and Peoria location because of the Fitzsimmons neighborhood redevelopment.

Moving a business, especially one with 20,000 square feet of building materials, is not for the faint-of-heart and fraught with all sorts of retail risks. Will our customers follow us? Will the new location be visible enough? Will we be in a convenient location for our program participants?

Commercial Real Estate is a difficult but extremely important undertaking for any retail business. The location of a business is one of the top factors for retail success or failure. For thrift store faith ventures, commercial real estate becomes an even bigger challenge. One must balance the need for a visible location near your customer base with nonprofit budget constraints. So you find yourself wrestling with the inevitable tough question: Should we move into donated or significantly less expensive space in a lousy location or rent expensive space in a high-traffic area?

At Belay Enterprises, we've pursued both approaches with mixed results. We spent six years running Baby Bud's out of a donated space, slowly watching our customers disappear because of community redevelopment. Yet, we found it hard to give up free rent for a move to a better location...until we were forced out.

Once again, we are wrestling with those questions as we search for space for our budding cabinet manufacturing business. As we've seen at Bud's Warehouse over the years, renting the best retail location you can afford will often outweigh the less attractive donated site. When devising your business plan, build in enough of a budget for a visible location and it will have a positive impact on your mission.

But then be prepared for the wackiness as you start to negotiate.

Because it will come.

And boy do I have some new stories.

No comments: