By Gagandeep Ghuman
Published: March. 9, 2013
When he signed on to buy his Second Ave property few years ago, it felt like something good was happening.
Olympics were coming, and optimism, along with the scent of freshly-minted money, was in the air.
John (let’s call him John), unable to rent in downtown Squamish, decided to buy property on Second Ave. in downtown Squamish.
What, he thought to himself, could possibly go wrong?
“It seemed like the best deal at that time,” he said.
“Now,” he said shaking in his seat, as if electrified by anger.
“This wouldn’t even sell in a garage sale,” he said.
The property has been on sale for more than a year now, and there are hardly any buyers.
From glee to anger, it’s been a short journey for John.
–xx–
The signs are there.
It’s hard not to walk ten steps on Second Ave without seeing them: For Lease and For Sale signs.
There are offers of free commercial rents.
Take a look at the data sheet for properties for lease or sale on CLSLink.ca, and two words stick out.
Second Ave.
There are 15 properties available for lease on Second Ave, with the average rent of $11 per square foot.
The rent for Cleveland Ave is slightly high, but it’s in Garibaldi Mall that rents start to go up.
For instance, a second floor office above Booster juice and Westland Insurance is listed at $16 a square foot.
It’s about the same ($16) for a commercial rental on Tantalus Road.
Dr. Stein Hoff owns property on Second Ave., and he believes the decision to open highway for commercial development led to this situation on Second Ave.
“The district has been dreadful and the Olympics were just a farce,” Dr. Hoff said.
Dr. Hoff bought his two buildings in 1983, hoping to sell them for an easy retirement.
Now, those plans have gone awry.
His property had been on sale, on and off, for five years.
There have been some ‘stupid’ offers, but nothing has really materialized.
He hasn’t increased the rent on his building, knowing the tenants won’t be able to afford it.
If the property doesn’t sell as he had hoped, Dr. Hoff says he might not have enough to sustain his retirement.
“I will have to go back to work,” he said.
Commercial realtor John Jervis said rents are low and properties are vacant because ‘anchor’ businesses are moving or have already moved out of downtown.
“Tourists make one stop and that is on the highway now,” he said.
“Business downtown is far too seasonal, and Squamish people don’t go out for dinner much anymore from Valleycliffe or Highlands because it’s so hard to find a taxi.”
Brad Hodge, owner of Better Computing, has given a serious thought to moving from a home-based business to one with a store-front.
But he feels the rents are still too high.
“To pay $700-1300/month for a space in the 2nd Ave. dead zone is too much of a shock,” he said.
Jim Webster says
He’s lucky, I’ve had my property on the market for over two years. That and the lack of fulltime employment in this area and around the Province has created some serious issues in my life.
Brad Hodge says
I should probably give some context to that quote. I’m only speaking from my own perspective (not as some kind of expert) as a 13 year Squamish business owner who has watched, with great interest, the ups and downs of Squamish retail/business.
Right now I’m pretty comfy. I make good money, and I get to write off a chunk of my housing costs as office space. I could at any time take on space, but space also includes extra hydro, phone, improvements and then of course staff. That’s a bill of between $30-70,000. Will that investment pay off? Having watched the experience of some of my competitors, probably not, best case. My business is not going to expand by that much instantly, so really it is just adding costs for an uncertain payoff at some future unspecified date. As I’ve said before, as a non-tourism Squamish based business, you are kind of having to fight two tides — the fact that people coming up from the city already have access to what you provide in spades, and the fact that your own local market shops down that way also. For me to make that move, I need to be convinced the risk is worthwhile, or the costs need to be low enough that the risk is mitigated. We’re not there yet on 2nd. And if I had to bet money, my bet would be we’re going to see more failures along the highway and rents coming under pressure there too. $5000/mo in a town of 17,000 makes absolutely no sense at all.
And anyway, bricks and mortar retail is dying. The only hope I think it has in low traffic areas is if costs bottom out at a point where us home based people think to ourselves — hey, I could have those bedrooms back. 2nd Ave. has come down but it is still way too expensive, in my opinion, for what it is. I can rattle off six or seven similar or larger municipalities with comparable areas where rent would could be as much as half the asking price on 2nd. And I wouldn’t have to bar the windows to prevent break-ins either.
Mike Mikkelsen says
In my opinion, this is a very simple issue. The price to rent commercial property in the downtown Squamish area is simply too high to bear.
Before I opened my store we looked downtown Squamish. I would also love to open a second location there, unfortunately I can’t afford to rent down there, even with the lower price, the lower traffic and business make it a bad move financially. Realistically the property down there is worth at most $8/sq ft, change it and things will change.
Craig Cherlet says
As residential real estate continues its slow correction, so too will commercial real estate.
Several economist have stated that real estate in Canada is over valued by at least 20% and by as much as 26% in BC. It’s inevitable but it will probably take 3 to 5 years as reluctant sellers won’t want to take a loss hoping it will turn around but it won’t for many years. Current prices were run up by government policy, Olympic speculation and fueled by debt, not real growth.
Real Estate is not the investment vehicle it was 15 years ago. Marc Carney from the Bank of Canada says it right.
http://www.cbc.ca/news/business/story/2013/02/18/business-housing-market-carney.html
“Real wealth is … gained through hard work, it’s not through some magical asset inflation.”
—Mark Carney, Bank of Canada
My suggestion to those trying to sell is cut your prices by 15 to 20% and you might start to attract a buyer or tenant.
Jason Bechard says
This is the natural progression of commerce. If you look at prairie towns, they were built with the downtown being the central location but as time passed everything moved along the highway. Why?
1. Location, Location, Location. Access from the highway attracts travelers, it allows for cheaper shipping costs as trucks don’t have to travel through town centers. Though in Squamish’ s case I don’t think would be very much difference between delivering to Cleveland or Discovery way.
2. Time, shoppers can cut down travel times by accessing things off a faster traveled highway then trying to navigate through downtown streets.
The only thing I can see making downtown appealing again is that building owners drop their square footage rates to the floor.
adam says
I work and shop in the Garibaldi Village and apart from the RBC bank and Save on Foods, there is not one single other business I need in the downtown area. Sure, others will shop there but I have everything I need right on my doorstep and rarely shop elsewhere.
I can also understand why tourists don’t as well. It’s just not appealing from an outsiders point of view.
I have bought many friends and family to the area and they all think it just looks tired. What stores do tourists really need to visit on a trip from Washington to Whistler? The rents have to come down as the demand clearly isn’t there.
John says
Just to give context to the notion that rental rates are the primary fault: If you rent a 1,000 square foot store, the difference between $12 per square foot and $8 per square foot is $333 per month. Now, that small amount shouldn’t make or break any worthy business. Also to be fair, landlords have mortgages to pay, and below a certain level it would be a loss every month to own a building – perhaps OK short term, but no sense to accept a long-term lease at losing rates.
So, I suggest the way to improve business viability is to focus on other meaningful factors such as “environment” (unique/good customer experience to attract them there), “transportation” (my friend tried to take the public bus the other day – arrived at the stop 10 minutes before the time in the schedule, the bus never came – so she cancelled going to downtown and walked to Garibaldi Village instead), “promotion” (better, meaningful,compelling signage on the highway and in the AC, for starters…).
Personally, I would argue that current rents are reasonable, but landlords should be more involved and proactively contribute together with their tenants, to support improvements to the above factors; Ideally through a focused BIA and together with (timely) cooperation from DOS, . Downtown is its own distinct shopping area brand, and the other shopping centres are competing with very experienced managers using comprehensive marketing plans and the advantage of highway access and visibility.
Much good has already been done to build upon, now it just needs a breakthrough year with support of DOS streetscape improvements, and some concerted ongoing effective promotion. Change is coming, be positive, get on board…
Brad Hodge says
I agree John. You are spot on about Downtown’s potential and things that could be improved upon. However as it stands today, there is not a lot of inducement to locate there. A lot of the buildings are run down (I know many tenants and have heard and *seen* all the horror stories), there is a lot of B&E activity and traffic by all accounts is minimal. Particularly on building condition, I can’t imagine things have gotten much better with space sitting empty this long. $333/mo ‘extra’ would not break me, but given the overall package as it sits and in consideration of what other expenditures would be required to set up shop — it amounts to a sizeable risk for what at present probably is not sufficient reward. I think given how much empty space sits there, and how much easier turnover seems to be up north by comparison (ie. the lineup for the former Movie Rental space), that is evidently what other businesses have concluded also. I’d like to think my business is worthy; just as it relates to Downtown, somewhat disinterested. 🙂 We all agree Downtown has potential and a future, however we’ve been in agreement on that for a decade and a half and after little or no movement over that amount of time, you become a little skeptical when new promises are made.
That said, I wouldn’t mind getting this mess out of my house. I have made offers to a few landlords on a short term basis, ie. 1 year lease at discounted rate in consideration of current conditions. More than likely if someone took that deal, they’d be able to raise rent on me down the road because by then I wouldn’t be interested in moving back home. But no bites. In fact one manager told me they preferred the tax write off of letting it sit empty. Not much I can do there.
Deb McBride says
a few balloons would help second avenue tie in with the festivities downtown
there is no shortage of people for events
the decades old question of “how to get people downtown” has been answered… people want to have fun
and Squamish BC has events downtown every weekend in the summer
… are they welcomed?