Tuesday, December 04, 2007

The Price Is Wrong?

A fire early Sunday destroyed a minor Saskatoon landmark. A restaurant has been operating under the Commodore name on Saskatoon's Second Avenue since the 1940s. In recent years it had been operated as Chau's Commodore, a Chinese restaurant. Also destroyed was a coffee bar, Gotta Hava Java, located next door. And smoke and minor water damage have put a number of other businesses temporarily out of action, including the neighbouring Olympia Restaurant and the McDonalds Express. Yep, there were four restaurants side by side. The preliminary damage estimate is one million dollars.

But a peculiar fact came up in today's Saskatoon Star Phoenix article on the fire. Realtor Bob Adam said that he put Chau's on the market in September for $55,000, and that a previous attempt by another realtor had had an asking price of $125,000. Frankly 55 grand strikes me as low in the current Saskatoon market. Like other property commercial real estate prices have gone up in the past year or so. This includes in the city centre. The increase was enough to prompt one local business owner to finally close her Second Avenue gift shop after decades and sell the property, whereas she had considered previous offers insufficient. Chau's was only half a block from the condo development in the old Bay store, which looks like it's finally getting close to completion, and the recently started transformation of the KG Hotel into yet more condos, so you'd think you could get a better price for the restaurant than $55,000. One would assume that more people living in the area will result in increased restaurant traffic, and hence make existing restaurant properties more valuable, but perhaps some other factors were involved.

1 comment:

Brent McKee said...

The price did seem low to me; I put it down to the property not selling at $125,000. Then too there is the question of what is actually for sale - the property or just a lease on the property and how long that lease has to run. Still the price seems low. (And while I'm not accusing anyone of anything and speaking purely hypothetically - it seems like a good reason for a "convenient" fire.)