The construction of the concession hits a wall
“While my need for ownership for the two stores has not changed, COVID has given us a break to assess the viability of the project and determine if we could ultimately attract more franchises to this property,” said Croxon.
“It has since given us another break, as the cost of raw materials and labor has likely skyrocketed along with the rest of the construction industry. It would still be my desire to eventually develop the property.
While many concession projects across Canada have been hampered, especially during the first months of the COVID19 pandemic in 2020, rising construction costs have become the latest challenge, said Silvia Carfora, CEO of Weis Group. .
“In Q4 2020, projects started coming back online, and we’re still seeing that,” Carfora said. “What we’re seeing now is that the costing process for the project is taking longer. “
“In Q4 2020, projects started coming back online, and we’re still seeing that,” Carfora said. “What we are now seeing is that the costing process for the project is taking longer.”
A rapidly changing market has given automakers a break to reconsider what their dealership’s footprint should look like, Croxon said.
“The last thing you want to do is build a 40,000 square foot (4000 square meters) store tomorrow, only to realize that you only need 20,000 square feet (2000 square meters) in five. years because of electrification and cars requiring less service work and customers doing more online shopping and requiring less interaction and experience in the showroom.
EXHIBITION ROOMS: THINK RETRACTION
Automakers are going to have to accept new formats for dealerships, such as boutiques or small showrooms, said Michael Talmage, executive vice president of Toronto-based Pfaff Automotive Partners.
“I don’t think you need a huge showroom with all the models to display things. It’s now prohibitive, I think, to start building some of these things. There is the cost of real estate and the cost of construction.
“Everything has exploded in the last five years. It is difficult to make these figures in pencil.
Margins are slim in the dealer world, which struggles with high occupancy and labor costs, Talmage said. “You have to be very careful. It’s so hard trying to find a space that fits the business model.
Croxon said it is in talks with dealers in the nearby town of Newmarket who are considering moving their stores to the proposed mall.
“I could hypothetically make plans to move three dealerships there tomorrow.”
Despite the challenges facing the auto mall, Croxon said he wants to go all the way, albeit on a smaller scale, with the initial budget shrinking by around 65%.
Still, he said he believed in the long-term viability of the concession model. He declined to disclose the cost of the initial project.
“I can see the growth that is happening in the Newmarket and East Gwillimbury area,” said Croxon, “and the opportunity to build something of this magnitude really excites me.”