Buy or lease?

[tornfaith07]

We are shopping for a building.  What are the pros and cons on whether to buy or lease?

[johnlarson]

A whole website could be dedicated to this topic.

[Alomax]

Buy : Big investment up front, but you can do whatever you want to it, and no recurring cost beyond property tax.

Rent : Lower cost per month, and someone else deals with any property issues.

[johnlarson]

Location is key.  I would think that if you can afford to own your own building in an ideal location, then going that route would be good.  In my location, buildings for my use were out of my range to purchase.

[tornfaith07]

What kind of square footage do you have in your buildings?

[johnlarson]

My locations are in malls and shopping centers.  The largest is in 3,500 sq ft.  If I owned a stand alone place, I would want double.  If I could afford that I would go a whole different direction.  I would be more like a bowling center with food and 60 Xbox and 40 pc.  Might end up that way one day!

[tornfaith07]

I was concerned on stipulations on things like operating hours and what not by being in a shopping center/mall.  The one spot I was looking at is 3250 sq ft, it used to be a movie rental store so its nice and open.  It's on a the end of a 6 store shopping center right across from a high school.  We are planning to start with ~18 xbox stations & 3 specialty stations (larger tv, kinect, rock band, etc).  No PC's.  I still need to make contact to get leasing information but I wasn't sure it that was a decent size space for our start.

[RsteeleAUG]

What are your plans for all of the extra space you're going to have?
With 18 to 21 stations even with the 3 large stations you're going to have a lot of left over space in 3250' sq ft.

[tornfaith07]

Well we are tossing around a couple ideas.  We want to have a small lounge area with tables for people with laptops to access free WiFi and to just hang out.  WE were thinking of putting in more stations, or putting in pool tables/air hockey tables, things of that nature and charging an hourly rate for those.  There was also discussion of maybe putting in arcade games.  And I still need to call about this place because I don't know if the 3250 is all available for station space or if we need to put it in office space and things of that nature or what that would consist of for a leased space.

[Alomax]

Some quick off-the-cuff math, you could fit ~90 stations into 3200sqft fairly comfortably.  Probably closer to 80 with multiple bathrooms and a generous counterspace.

[Playground]

@ johnlarson

Hey john,

Do you have any probs with the mall sites, being that the mall have certain hours of operation?

[johnlarson]

My Fayetteville location is at a mall, but it is not "the mall", it has a theater, but is not the main mall.  We have a rear exit and have it on our lease to be open 24/7.  We have to close the mall gate when the mall closes and if we trigger the mall alarms, I will get fined.  So far this has not been an issue.

My Columbus, GA location is in a mall, the main mall for the city.  We are open just mall hours.  If I had a location that had it's own entrance (not just a back door) the mall would let me have extended hours, like the restaurants do.  We have been written up there for opening too early.  The mall opens its doors at 8 am for mall walkers and we would have customers on Fridays and Saturdays waiting for us to open, so we started opening up early.  The mall will not let us open before 10 am.  We are normally 100% full by noon on Saturdays and 1 pm on Sundays (open at noon).  Our lease will be up in 2013, I am not sure what we will do, we have some options (including putting in an outside entrance), but they all seem to have a pretty big price tag.  They are also willing to do extended hours, but not 24/7, so I am not sure, I really like the 24/7 model.  No one has to worry if we are open or not.  The retail sales at this location help with the increased rent.

[Playground]

cool. I just moved from fayetteville early this year. i never knew of your place. so, if i decide to get in with a mall, just make sure it has an outside entrance after mall hours?

[Gord]

We are shopping for a building.  What are the pros and cons on whether to buy or lease?

For the cost of buying a commercial building, I could build many stores which would generate far more revenue that a building could possibly appreciate in value.  Only buy if you have the money available that would not otherwise be contributed to the venture.

[johnlarson]

cool. I just moved from fayetteville early this year. i never knew of your place. so, if i decide to get in with a mall, just make sure it has an outside entrance after mall hours?

We opened up at Marketfair Mall in February of this year.  We were on Yadkin Road before that, just down from McDonalds across from Nelson and Nelson.

With the mall, be sure to get the extended hours in your lease.