High rents force small businesses in Danforth to shut down, BIA says

Small business owners who rent a commercial property face challenges

This pictures shows a number of establishments at Danforth Avenue.
Along the east end of Danforth Avenue, there are plenty of empty stores that suspended their business activity due to increasing rent. Rita Maltceva/Toronto Observer

Starting a small business can be difficult for those who rent a commercial property, the manager of an east end BIA says.

“There is a whole bunch of great businesses that eventually get pushed out of the neighbourhoods, just because rents become extortionately high,” said Colin Johnson, manager of Danforth Mosaic BIA.

More than 500 businesses are registered in the three-kilometre stretch of Danforth Avenue covered by the BIA. Three or four of them shut down each year due to an inability to afford rent, Johnson said.

“It’s not a lot, but it’s not great either.”

Daniel Enkussellsie, owner of Jimma Coffee Ltd. at 1303 Danforth Ave, said that rent for his property is not too hight, but he knows other business owners in the area who struggle to pay for rent. However, Enkussellsie was reluctant to name them.

Other business owners who were asked to share a comment about their rent were reluctant to speak with a reporter.

The price per square foot for businesses varies, depending on the location and estimated property value.

On the east side of Danforth Avenue, it’s about $28 per square foot — before tenant improvement allowance, a fee that goes towards the maintenance of a building.

Johnston compared this price with the Beaches where business owners pay $55 per square foot, which he said is almost the same price in downtown.

“You just need to look a little bit south onto the Beaches, and business owners there are struggling the most,” Johnson said.

“Rents are way too high there. Why would you open an establishment in the Beaches, where there’s less volume of people? You could rent a property in downtown and get even more customers.”

Montina Guiry, an employee of art supply store DeSerres, said her favourite butcher at Woodbine Avenue is shutting down at the end of the month because its rent went up to $4,000.

“I’m very upset about it. They have a good-quality meat from Alberta that reminds me of home.”

Neighbourhoods in East York have gentrified in the past five to 10 years and become desirable locations for commerce and tourism. As a result, the demand for local property is mounting, putting at risk the business owners whose leases are usually extended from three to 10 years.

“I talk privately to business owners, and many of them say ‘I don’t know if I’m going to stay once my lease is up because I don’t know what my landlord’s going to do with the rent price,’” Johnson said. “It’s absolutely crazy.”

The BIA also represents landlords, and Johnson says just blaming them is not the way to solve the problem.

“If we change our tax structure, we would be able to not only encourage local business, but landlords would have less incentive to charge crazy rates,” he said.

In addition, a landlord can decide to sell the property to build a condo, which displaces local institutions located there.

“Of course, the business owners can find other places to rent in the neighbourhood, but they might lose customers because they move outside of the range that the customer wants to go,” Johnson said.

Amid the challenges that businessmen face renting a property, the Danforth Mosaic manager said he would recommend buying a property for those who are eager to start a business.

“Obviously, that’s not accessible to everyone, and not many people have that income to be able to purchase it,” Johnson said. “Starting a business in Toronto is a very dangerous game.”

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Posted: Mar 5 2020 6:16 pm
Filed under: News