Are cafes changing the property market landscape?

Friday, 8 September, 2017
We see this happening all over the country. Love Coffee was invited to Urban Lime's Hacienda development to attract prospective tenants. Tribe Coffee was brought into a BMW branch to get people through the door. The more we think about it, the more we see the pattern. The example below of Seattle Coffee Company shows that it is a hotly contested space. We're not surprised, remember, good coffee = good business!

With the largest number of independent speciality coffee roasters in South Africa, Cape Town, is becoming widely recognised as the coffee capital of Africa. Cape Town coffee culture is booming and coupled with the nomadic flexi-worker trend on the rise – coffee shops are rapidly becoming the generic for ‘offices’.

The Power of the Bean

In a bygone era, Cape Town was better known for its tea-houses. That has shifted dramatically according to Iain Evans, the publisher of Coffee Magazine, who said that the SA coffee scene is radically different to what it was 10 years ago. South Africa has caught up to global standards and you can now go into a high-end roastery in South Africa and have an experience on par with Melbourne or Vancouver.

In the past decade, the industry has grown from a mere 20 roasteries to well over 250 independent roasters in South Africa. Statistics South Africa has also recorded steady growth in the restaurant and coffee shop sector with year-on-year revenue growth at 4.5%.

Cape Town’s ‘coffee capital’ status is further entrenched by the Mother City’s consistent exposure on international travel blogs. A case in point is Truth Coffee being voted ‘the best coffee shop in the world’ by the British Telegraph.

Coffee and Property

You may ask what this explosion of coffee culture has to do with property prices? According to Janet Lightbody of the Ikon Property Group – a whole lot. (And that’s besides the known side- effects of caffeine).

When you position a high-end café such as the Seattle Coffee Company in a commercial building, positive spin-offs are substantial, not only for the landlord, but for the neighbouring tenants too. “Recognised brands such as Seattle Coffee Company add immense value to a building by acting as a drawcard and increasing customer footfall for neighbouring stores.” Janet maintains that tenants such as Seattle Coffee Company can afford generous fit-out budgets and often transform a blank canvass into a superior retail space, an additional advantage for landlords.

“By leveraging group buying power they are able pay competitive rentals and commit to longer tenures. This investment can often result in the landlord’s building grade being re-rated and landlords enjoy strong tenancy covenants – ultimately a win-win scenario,” adds Elton Holland, Director Ikon Property Group.

Benefits of Collaboration

With a preferred commercial property broker on board, the Seattle Coffee Company has the benefit of mapping out their expansion plans collaboratively with a property specialist who is not only well-connected, but also equipped with area-specific knowledge. In turn, the broker’s search for ideal sites for new stores is informed by a shared strategic vision – to the benefit of their client.

The Seattle Coffee Company, which is Direct Trade (families who grow and pick the beans are paid directly at least 23% above Fair Trade) and wholly SA-owned, recently opened a store in The Palm’s, a rejuvenated old bakery in Woodstock and at 4 Regent Road in Sea Point. Both sites were identified and brokered by Ikon Properties. “Working with Janet Lightbody, IKON Property Group, has been great. She has integrity, is professional and continues to represent Seattle Coffee Company in our property capacity.” Barry Parker, Seattle Coffee Company.

As the coffee culture continues to brew in Cape Town and nationwide, new Seattle Coffee Company stores can be anticipated on Church Square and in Newspaper House in the CBD. With their ‘no-compromise on quality coffee’ attitude and sustainable ethos, we are likely to see Seattle Coffee Company becoming part of the DNA of a growing coffee society in South Africa. And as they expand their coffee footprint – they are positively influencing commercial & retail property prices along the way.

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