Is high commercial rent just the cost of doing business?

Turnover rate on Yonge strip north of Lawrence causes little alarm

Taking a walk on either the west or east side of Yonge Street north of Lawrence Avenue, what becomes immediately noticeable is the prevalence of closed-up businesses and for-lease signs.

It seems somewhat out of place, considering this rather attractive area neighbours a collection of some of the wealthiest postal codes in Canada. But even corporate chains like Yogurty’s and Quiznos have failed to make it here.

The high rent that comes with having a storefront on Yonge Street is believed to have been the issue for many who have closed their doors. A smaller store can be paying rent of about $6,000 a month, which does not include taxes, maintenance and insurance. Add on the cost of stock and staff, and it can become a challenge each month just to break even.

Michael Chung says he pays a little over $7,000 a month, all-inclusive, for his 2,000-sq.-ft. gaming store For The Win, which opened in November. It’s a lowered cost, because he funded the renovations. Though he said he needs to bring in about $30,000 a month before he’s in the black, he doesn’t take issue with the rent costs.

“Rent here is expensive,” he acknowledged, noting that he has seen one nearby location already have two owners in the six months he has been there. “But there are businesses that are able to sustain it.”

While he says it may be “a big sign” when franchises struggle to stay in business, he thinks it gives an advantage to stores like his, because of its ability to adapt to the neighbourhood.

“I can find new ways to make money, which I’m doing,” he said. “If you’re a franchise … you can’t really do anything. Either people like your business or they don’t.”

Brenda Evans, who has worked in businesses along this stretch of Yonge for 35 years and now runs Raw Juice Company on the east side of Yonge Street a block north of Chung, regards the high rent as “the price of doing business.”

“This area is pricey,” she said. “It’s always been pricey. You get what you pay for.”

Evans said she has no doubt it’s the high rent that causes a high turnover of stores in the area. Raw Juice Company pays just over $6,000 a month before taxes and insurance.

“You either make it on this street or you don’t,” she remarked.

Royal LePage sales representative Belinda Lelli says she’s both sold and leased commercial spaces in the area, and while the rent may be high it’s not without reason.

“They might seem higher, but it’s also because of the heavy walk-in traffic,” she said. “When it’s really cold and people can’t get places you’re at an advantage to have that here on Yonge Street, because they will walk to you.”

Belli, who also lives in the neighbourhood and frequents many local shops, said the strip being served by the subway line is another reason it comes at a premium.

“It’s convenient for the client,” she said. “You have to pay to be on the subway line, because you’re making it easier for people to get to you.”

Belli said she sees trends popping up that often dictate what businesses will be successful. Right now it’s restaurants, personal services like nail salons and barbershops, and pet services. Specialty shops that serve either a unique product or niche audience can also be successful, she believes.

“It’s welcoming,” she said. “There’s that community feel. It’s very unique here.”

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Posted: May 26 2015 5:10 pm
Filed in: NEWS
Edition: Toronto