It’s not about floor space – it’s about opportunity

I've noticed a trend in (esp) capital cities…

Not just here in Australia but all around the world. Now I'm finally taking a leaf out of this playbook and looking and putting it into action.

What am I talking about?

Tiny shops.

There's a movement to making shop spaces much smaller. I first really sat up and paid attention to this a couple of years ago when I was in Sydney looking at the Crumpler bag store.

It's not a big store, and the main reason is that they carry very little stock. It's mostly an e-commerce outlet and the shop is there so buyers (and fans) can go check out the bags etc in the flesh before they choose which one they want to buy online.

It's brilliant because it keeps rent down and allows online stores in this case to maintain a high st presence.

But the small shop thing is not only for e-commerce companies.

Check out this kiosk I saw recently for sale on the Gold Coast

This is several kiosks for sale as part of a single sale. They are each big enough to have one or two people stand behind the counter and serve people on the street. From what I saw when I checked them out, they were doing a roaring trade.

The attractiveness of this store is in itself such a win-win that I can’t ignore it any longer.

Let me explain.

They are small – we know that…

That means you can fit more of them into a space that once would have only housed a single shop.

From a tenants point of view, that means the rent is going to be lower than if they had to lease the whole joint. That’s great for small businesses. It’s an easy entry point for tenants to be able to have a business in a busy area that they otherwise couldn’t afford.

From an investors point of view, another win-win.

If you can find a strata’d kiosk you’re going to have a shop that’s tiny, yes, but at a very low entry point to the market… If it’s in the right location then it’s going to be a great little investment. It will still attract decent rent and get you in an area that you otherwise may not be able to afford.

Also if you are in an area that has a lot of passing foot traffic, and those businesses do very well, you’re going to find that the competition for those kiosks is going to drive down the cap rate which means the value of the property is higher.

Remember these tiny shops in the CBD

These things did such good trade that they ended up commanding massive rents and sale prices.

Now they’ve got even smaller – the smallest ones in Melbourne now fit into one of these tiny steel cylinders. Remember this is not about flood space – it’s about opportunity…

But here’s where I see the biggest opportunity right now.

Converting existing shops in the right areas into several kiosks.

Here’s why I love the idea.

  1. You can fit several kiosks into the space of one shop so while individual rents go down, overall rent goes up.
  2. You reduce risk because more rentable spaces equals more tenants, even if one becomes untenanted (or even two, if you say turn one shop into 4 kiosks,) you still have some rent coming in. this is a massive risk reduction.
  3. You may be able to strata these kiosks up (depending on council regulations) giving you the ability to sell them off individually – this would add up to a massive shift in value for the property overall
  4. Finally… kiosks are small… they are not very deep… so what happens to the space behind the kiosks? Assuming you have a regular store with some depth to it… there will be space behind the kiosks… Why not turn that into another rentable space? Offices, storage… depending on the area there will be endless possibilities for that.

Like I said this is about opportunity… the more opportunity you can provide by providing rentable spaces where people can make money, the more you will make.



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