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Photo By Jeanette Forsythe
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Market forces
Commercial realtors hot for high rents see new Yorkville in funky Kensington
By MICHAEL LOUIS JOHNSON

Speculation, greed, insecurity, fear. No, I’m not talking about the world financial markets; I’m talking about Kensington Market. Toronto’s heartland of small family business is once again being threatened with a corporate flagship. But the real fear goes deeper than the size of your morning coffee.

The sudden closure of J & J Fruit Market by Toronto public health has left a vacancy at Nassau and Augusta, and there’s a rumour of a Starbucks moving in. Locals have already begun their resistance, with petitions in every shop and posters saying, “We love our local cafés.”
 
Though the Seattle-based coffee giant denies any interest in a Kensington location, Councillor Adam Vaughan is taking no chances. He says he immediately contacted the firm’s head office to remind them he was a strong part of their losing battle for the Dooney’s location on Bloor and to inform them that some 900 square feet of the property is actually city-owned and will require a boulevard permit. Part of the licensing process includes polling local residents. “The company would be in for a loud debate,” warns Vaughan.
 

Kensington Market grapples with the threat of a Starbucks at Nassau and Augusta.
Photo By Jeanette Forsythe

 

Many feel a Starbucks wouldn’t do well in a ’hood known for its anti-corporate attitude. But a big multinational company can afford to take a loss just to have a flagship store in a popular locale.
 
Whether it’s the McDonald’s of coffee shops or some other corporate store, what’s got the merchants really worried is the sudden increase in rents. Esbin Realty lists the corner property at $5,000/month for roughly 1,300 square feet. That’s more than 30 per cent higher than most of the neighbours are currently paying.
 
It’s a concern of Jack Sumbolin, who sells flags and stickers, buttons and thread at Araz Impressions. He’s been on the southwest corner of Nassau and Augusta for over 20 years and has always dealt directly with his landlord. “Our landlords are nice people. They understand the seasonal nature of Kensington,” he says.
 
Esbin Realty agent Philip Pick, who represents the owners of the former J & J property, tells me, “These kinds of marginal businesses will have to go. Living in downtown Toronto is a privilege. Nothing stays the same. To think you can run a shop like that on prime real estate is not being realistic.”
 
Pick, who works out of Yorkville and whose signs are displayed on four Augusta Avenue properties, is selling Kensington as “the new Yorkville.” Like any good commercial realtor, he’s trying to find what’s referred to in the industry as a “blue chip” tenant: a national or international chain store that can sink money into the property and won’t be late with the rent in February when there’s not a tourist in site. 
 
“Especially in a softening economy, a landlord is entitled to some security. I find them a tenant with a proven history.”
 
Leonard Lutchminarine, who’s run the Economy Shop on Augusta for 27 years, certainly has a business with a history.  His store typifies Kensington Market, with its spray bottles of perfume, three-packs of socks, soccer jerseys and fedoras. Lutchminarine’s lease is almost up, and he fears his landlord may not be able to resist the current trend of skyrocketing rents. There’s presently no form of rent control governing commercial leasing. When a lease is up, the rent is fully negotiable. As one aggressive realtor decides to brand a neighbourhood, so goes the market value.
 
Kensington’s designation as a National Historic Site offers no help, and in fact it may be part of the problem. Parks Canada calls Kensington a tourist destination, so now realtors can market the properties as such. As more stores open up catering to tourists, the area will lose its actual history, becoming Yonge and Dundas with its uniformed employees working to a set of rules prescribed by head office.
 
Welcome to the machine.
 
“The aging ownership is the cloud on the horizon of the future of Kensington Market,” says Vaughan. When property owners start to employ realtors, it adds new pressures to the rental equation. Generally, commercial agents work on commission, usually the equivalent of one month’s rent for each year of the lease. A five-year lease at $5,000/month would earn a $25,000 commission – meaning the rent has to increase if only to pay the realtor.
 
As properties become simple commodities, they cease to be the physical reality of the community. One long-time resident and merchant in the area, describing some landlords, explains the issue with a lesson in Yiddish. “The term is ‘khazer’: there’s a pig, there’s a glutton and there’s a khazer. How much do you need to eat before you’re full?”
 
Augusta Avenue this afternoon is a street of diversity and distinction. Two boys, maybe 12 or 13, roll their skateboards the wrong way down the road, each of them wearing a cheap fedora. They look like they own the street. But as the global economy crashes like never before, our friendly neighbourhood realtor  is telling us the old Jewish Market is ready to go upscale.

news@nowtoronto.com

NOW | October 14-21, 2008 | VOL 28 NO 7
Copyright 2009 NOW Communications
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Comments
Posted by Yada yada on 10/18/2008, 01:59 AM
Here's an idea: Someone should research a list of properties that are being handled by Esbin Realty agent Philip Pick, and begin a boycott campaign of whichever businesses open on those properties. That will send a strong message not to deal with douches like him.

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