Commercial Rents & Key Money

[thaiaan]

I would like to get an idea on rent prices in busy commercial areas in Pattaya with lots of foot traffic and also rents in malls.Need a small to medium space for restaurant-about the size of a fast food restaurant.Besides Walking St. and Beach St.,which streets in Pattaya are very busy commercial streets?Which malls have busy food courts and what would the rents be like?

Also isn't key money basically just a bribe?I know it's illegal in many countries and it is not a refundable security deposit or prepaid rent.Is key money only required for commercial space with existing businesses and not empty space?

I see many restaurants and businesses for sale but since I would like to start with an empty space,I can't seem to find an empty commercial space for rent.I don't want to buy someone else's business,equipment,furnishings,etc.,as I would like to custom design my business for future chain/franchise opportunities.

[SunbeltAsia]

I would like to get an idea on rent prices in busy commercial areas in Pattaya with lots of foot traffic and also rents in malls

At Royal Garden Plaza, 2,200 Baht per Sq.m plus 150 Baht sq.m service fee. 10% increase in rent every year. 6 month deposit and no key money.

At Carrefour.. .(100 meters from Central Road / 3rd.) 1,000 Baht Sq.m

The food courts in the malls.. 25-35% of gross sales.

Very hard to get into the malls unless you have a brand name.

As for rents on stand alone shophouses on beach road. ( 60 Sq.m ) goes around 80,000- 100,000 Baht per month with key money.

key money only required for commercial space with existing businesses and not empty space?

Key money almost NEVER is charged for a buyer taking over an existing business with the landlord. I' haven't seen it one time in over 300 business transfers. Please note... paid rent every year is different. I'm talking about keymoney which is a gift, given as a inducement for the landlord to rent to you.

The landlord will charge key money for a brand new concept with a brand new tenant for his empty commercial space. Several reasons why. He states as Thailand has no Credit Bureau and has no recourse if you leave. Others feel it’s a way that he can put money in his pocket without reporting it to the tax people.

Also isn't key money basically just a bribe?I know it's illegal in many countries

Key money is illegal in Thailand only if you pay cash and the landlord doesn't report it as income.

I can't seem to find an empty commercial space for rent.I

Location location and location. Most all the prime spots are taken. You simply just don't see a for rent sign.

I don't want to buy someone else's business,equipment,furnishings,etc.,as I would like to custom design my business for future chain/franchise opportunities.

If you are looking for a location with high traffic count. The probability is very high, buying it is the only way to get a good location. Most expert restauranteurs will tell you it is cheaper to buy an existing restaurant than starting from scratch especially when you are talking about the expense of the kitchen area.

www.sunbeltasia.com

[thaiaan]

I would like to get an idea on rent prices in busy commercial areas in Pattaya with lots of foot traffic and also rents in malls

At Royal Garden Plaza, 2,200 Baht per Sq.m plus 150 Baht sq.m service fee. 10% increase in rent every year. 6 month deposit and no key money.

At Carrefour.. .(100 meters from Central Road / 3rd.) 1,000 Baht Sq.m

The food courts in the malls.. 25-35% of gross sales.

Very hard to get into the malls unless you have a brand name.

As for rents on stand alone shophouses on beach road. ( 60 Sq.m ) goes around 80,000- 100,000 Baht per month with key money.

key money only required for commercial space with existing businesses and not empty space?

Key money almost NEVER is charged for a buyer taking over an existing business with the landlord. I' haven't seen it one time in over 300 business transfers. Please note... paid rent every year is different. I'm talking about keymoney which is a gift, given as a inducement for the landlord to rent to you.

The landlord will charge key money for a brand new concept with a brand new tenant for his empty commercial space. Several reasons why. He states as Thailand has no Credit Bureau and has no recourse if you leave. Others feel it’s a way that he can put money in his pocket without reporting it to the tax people.

Also isn't key money basically just a bribe?I know it's illegal in many countries

Key money is illegal in Thailand only if you pay cash and the landlord doesn't report it as income.

I can't seem to find an empty commercial space for rent.I

Location location and location. Most all the prime spots are taken. You simply just don't see a for rent sign.

I don't want to buy someone else's business,equipment,furnishings,etc.,as I would like to custom design my business for future chain/franchise opportunities.

If you are looking for a location with high traffic count. The probability is very high, buying it is the only way to get a good location. Most expert restauranteurs will tell you it is cheaper to buy an existing restaurant than starting from scratch especially when you are talking about the expense of the kitchen area.

www.sunbeltasia.com

<{POST_SNAPBACK}>

I may have to look for an existing restaurant in Pattaya or maybe Bangkok and slowly convert it to my plans.I suppose it would be easier having suppliers and employees in place and a generating income and customer base instead of starting with an empty space which would require time to set up.I just don't like the idea of paying for furnishings and equipment I may want to change or don't need and feel the values business owners place on them are overinflated.

[~G~]

I just don't like the idea of paying for furnishings and equipment I may want to change or don't need and feel the values business owners place on them are overinflated.

<{POST_SNAPBACK}>

Don't want/need the furnishing and equipment? Well that's a great advantage when negotiating!

For example, tell the owners you agree for their price if they buy the furnishing and equipment from you for, say, 50% (or something in the neighbourhood - depends how much they overestimate it) of the value they place on it. If indeed it worths what they ask, how can they refuse buying it for half the price? Ask them to explain why not and they will tell you themselves that it is worthless. That will help to convince them you are not interested in it. Of course you will still end up paying something for it, but probably not what they asked initially.

Of course it also depends on supply and demand... How long is the place waiting to be sold... etc..

[johnnyk]

Wouldn't they just say they had already bought it once and don't want to buy it again. Thai logic.

[~G~]

Wouldn't they just say they had already bought it once and don't want to buy it again. Thai logic.

<{POST_SNAPBACK}>

They might. Then you tell them "I don't want you to be left with no property. Please, have some". farang logic.

[mojo]

I would like to get an idea on rent prices in busy commercial areas in Pattaya with lots of foot traffic and also rents in malls

At Royal Garden Plaza, 2,200 Baht per Sq.m plus 150 Baht sq.m service fee. 10% increase in rent every year. 6 month deposit and no key money.

At Carrefour.. .(100 meters from Central Road / 3rd.) 1,000 Baht Sq.m

The food courts in the malls.. 25-35% of gross sales.

Very hard to get into the malls unless you have a brand name.

As for rents on stand alone shophouses on beach road. ( 60 Sq.m ) goes around 80,000- 100,000 Baht per month with key money.

key money only required for commercial space with existing businesses and not empty space?

Key money almost NEVER is charged for a buyer taking over an existing business with the landlord. I' haven't seen it one time in over 300 business transfers. Please note... paid rent every year is different. I'm talking about keymoney which is a gift, given as a inducement for the landlord to rent to you.

The landlord will charge key money for a brand new concept with a brand new tenant for his empty commercial space. Several reasons why. He states as Thailand has no Credit Bureau and has no recourse if you leave. Others feel it’s a way that he can put money in his pocket without reporting it to the tax people.

Also isn't key money basically just a bribe?I know it's illegal in many countries

Key money is illegal in Thailand only if you pay cash and the landlord doesn't report it as income.

I can't seem to find an empty commercial space for rent.I

Location location and location. Most all the prime spots are taken. You simply just don't see a for rent sign.

I don't want to buy someone else's business,equipment,furnishings,etc.,as I would like to custom design my business for future chain/franchise opportunities.

If you are looking for a location with high traffic count. The probability is very high, buying it is the only way to get a good location. Most expert restauranteurs will tell you it is cheaper to buy an existing restaurant than starting from scratch especially when you are talking about the expense of the kitchen area.

www.sunbeltasia.com

<{POST_SNAPBACK}>

Dear Sunbelt,

Very interesting info and insights, a few questions If I may.

1. "The food courts in the malls.. 25-35% of gross sales.", do this apply to Mr. Donut, Baskin Robbins and other larger fast food players as well?

2. What is the current rent for retail space in BKK:s CBD?

3. Is there a way to get hold of retail space at, lets say, the food court floor at Emporium or any of the new shopping malls (Siam paragon etc.I am talking about space for a restaurant or food kiosk) without buying an existing business?

4. Do you have any idea how much the rent is for Siam futures "suburban walking malls"?

A lot of questions... But, thanks in advance.

Mojo

[SunbeltAsia]

1. "The food courts in the malls.. 25-35% of gross sales.", do this apply to Mr. Donut, Baskin Robbins and other larger fast food players as well?

Yes. If its a BIG name, they'll go down in some cases to 22%

2. What is the current rent for retail space in BKK:s CBD?

All over the place from 1.000 Baht Sq.m to 4,000 Baht Sq.m.

3. Is there a way to get hold of retail space at, lets say, the food court floor at Emporium or any of the new shopping malls (Siam paragon etc.I am talking about space for a restaurant or food kiosk) without buying an existing business?

Very hard to get space at the Emporium. They have a waiting list of over 300 people. By the way they get 35% of the gross!

Siam Paragon is booked up. Anyone that had gotten space there had to sign a 25 year contract. Thats great having a long term contract but they also had to pay the rent in advance for 25 years! Most people got a loan from a bank.

4. Do you have any idea how much the rent is for Siam futures "suburban walking malls"?

Sorry I don't but will check with our Real Estate Dept on Monday.

[mojo]

1. "The food courts in the malls.. 25-35% of gross sales.", do this apply to Mr. Donut, Baskin Robbins and other larger fast food players as well?

Yes. If its a BIG name, they'll go down in some cases to 22%

2. What is the current rent for retail space in BKK:s CBD?

All over the place from 1.000 Baht Sq.m to 4,000 Baht Sq.m.

3. Is there a way to get hold of retail space at, lets say, the food court floor at Emporium or any of the new shopping malls (Siam paragon etc.I am talking about space for a restaurant or food kiosk) without buying an existing business?

Very hard to get space at the Emporium. They have a waiting list of over 300 people. By the way they get 35% of the gross!

Siam Paragon is booked up. Anyone that had gotten space there had to sign a 25 year contract. Thats great having a long term contract but they also had to pay the rent in advance for 25 years! Most people got a loan from a bank.

4. Do you have any idea how much the rent is for Siam futures "suburban walking malls"?

Sorry I don't but will check with our Real Estate Dept on Monday.

<{POST_SNAPBACK}>

Dear Sunbelt,

Thanks a million for the answers, very needful and interesting information.