Should We Avoid High-Rent Commercial Spaces?

I read in the Papers of an Interview with the young owner of one of the largest Supermarket chains in the Philippines and the topic was of the ever-spiraling costs of commercial spaces in the country.

The interviewee is probably the third generation of family owners of the prestigious supermarket and department store chains and he had this to say:

1. Between choosing a Low-traffic, Low-rent space versus a High-Traffic High-rent space, he would always go for the High traffic, High-rent space;

2. In the Low-traffic, Low-rent space, the market is not there and is difficult to create traffic from almost nothing. In such a scenario, it is already a lost;

3. At least in the High-traffic, High-rent space, the market is there and you have equal chance of making it or not.

I would have to agree with him because:

a. Demand may be so strong as to more than cover the fixed amount of rent

b. You could try to be more efficient and bring down other operating expenses

c. The Location may be so strategic that the small business owner may even grab market share from his competitors in the area due to

--- Convenience (shorter walking distance for the customer)

--- Comfort (you have air-conditioning; others do not)

--- Security (If most of your customers are office workers who
can only shop after dark; your Location may have a BIG EDGE
because it is well-lighted, many passers-by & with mall
guards visibly patrolling your area)


THERE IS NO SUCH THING AS A GOOD LOCATION WITH A CHEAP RENT.