More small firms want to own
Memphis Business Journal - by Andy Ashby
In the face of a tough economy, Sarkis Kish Oriental Rug has consolidated its operations by building a new facility while adding additional revenue streams.
It sells middle- to upper-end rugs, which can cost thousands of dollars, depending on size and quality.
The business, which operates in the luxury segment of retail, has faced challenges since Sept. 11, 2001, according to vice president Sarkis Kish Jr., also known as Sarko, and the company has been looking at ways of saving money to maximize profits or invest back in the business.
One way to save money was by spending money.
The business bought a property near its longtime showroom on Sanderlin for $402,000, then spent $800,000 tearing it down and building a new 8,200-square-foot facility at 5179 Wheelis.
“It’s a better investment,” Sarko says. “We’re not paying rent to somebody else; we’re paying rent to ourselves.”
The building also allowed Sarkis Kish Oriental Rug to have its showroom, rug cleaning, rug repair, rug restoration and storage facilities under one roof. The company used to lease three different spaces: one for sales, one for repair and one for cleaning.
Its showroom was in a shopping center only a block away from its current location. The shopping center had better visibility, but the company figured that into its equation for the move.
“We realized people who were shopping for a rug were making a thought-out decision to shop for one,” Sarko says. “They weren’t just going to, because they were driving by or having lunch next door, pop in and get a rug.”
Sarko’s father, Sarkis, wanted to build a facility and subsidize it by renting out bays. In addition to its operations, the company now has two 1,800-square-foot bays for other retailers.
It recently signed Harrington Brown Art Gallery to a lease.
“We got the right tenant,” Sarko says. “We can feed off each other’s businesses because we have the same clientele.”
The company is also looking for a furniture store or interior designer for the second bay.
The Shopping Center Group LLC has handled the listings for the spaces.
Carson Claybrook, a broker with the Shopping Center Group, says having the landlord and tenant in one building creates a better rapport.
“I think this gives them less of a landlord/tenant relationship feel and more of a feel that they are both trying to make this location work together,” Claybrook says.
With both land and building prices dropping due to the economy, retailers that traditionally would not consider owning real estate are now looking for opportunities, particularly when there is upside in leasing excess space to complementary businesses, according to Gary Shanks, a broker at the Shopping Center Group.
“With additional store closings and bankruptcies forthcoming, there will continue to be opportunities for retailers to relocate and/or reposition themselves in the marketplace,” Shanks says. “Retailers are taking full advantage of market conditions in knowing they have the upper hand in negotiations.”
Claybrook and Shanks have seen a rise in leases being signed in the past 90 days.
“Most of these tenants are local mom-and-pop users that have anywhere from one to three locations and are taking advantage of the lower rental rates, and the ability to lock into a good rate for an extended period of time,” Claybrook says. “We also have seen movement in bargain-based retailers such as Big Lots, Family Dollar, Dollar General, that are surviving the storm better than most retailers.”
Sarkis Kish Oriental Rug
President: Sarkis Kish
Address: 5179 Wheelis Drive
Phone: (901) 818-6878
Web site: www.sarkiskish.com
aashby@bizjournals.com | 259-1732
http://memphis.bizjournals.com/memphis/stories/2009/11/16/story4.html?b=1258347600^2434631
