Adventures in Commercial Real Estate
It’s been 6 months since our CSA closed, so I figured it’s time for an update. If you’re newer here, then here’s the scoop. Back in October 2021 we ran a crowdfunding campaign I called CSA (Community Supported Apparel) to garner community buy-in and financial support to build our own production facility. In 30 days, we raised over $100k that would be used toward buying a building for this small factory we’ll be calling The Youniverse, giving us more control and flexibility over our manufacturing in the still choppy wake of pandemic supply chains.
To be honest, the last 6 months of trying my hand at buying commercial property has been utterly defeating. We’re all aware that the cost of housing is changing drastically. But you might not have known that this same wild inflation (and extreme lack of inventory) also exists within commercial real estate.
And while I’m certainly not giving up, what I’ve learned is that I’m an average person with an average amount of money trying to play a game that’s really for the wealthy and well connected. Cash is king, and bank financing is not.
Missoula, where Youer is based, is a small city (about 80k) and the few surrounding towns are very tiny which means there’s just not much inventory coming on the market. And when things do appear, they’re selling instantaneously for wildly over-asking OR they’re multi-million-dollar properties that are out of my price range. Nothing that I’m finding is turn-key, and the cost and timeline of construction to modify is a big factor.
Last April I was under contract on what I thought would be a perfect location, set to close in August. But a disastrous appraisal ended that deal. Since then, I’ve put in a few more offers (all uncomfortably over-asking) and have landed none of them. I’ve looked at bare land, industrial warehouses, historic churches, properties within city limits and locations 50 miles out of town. My wonderful realtor has even shaken loose a few things that weren’t on the market to begin with.
As the Missoula-area becomes more and more attractive (Apple News recently hailed it as ‘the next Silicon Valley’) I’m worried that I’m getting priced out of creating this dream without the help of private investment. While buying is the ultimate goal, renting isn’t off the table. But it’s been fairly prohibitive thus far with lease requirements of 3-5 years and monthly rents costing significantly more than mortgages. The recent legalization of recreational cannabis in Montana has led to a much more competitive rental market as dispensaries pop-up on every corner and will pay a premium for space. It’s a real wild place out there!
Currently, Youer operates out of a glorified garage – a miniature warehouse (less than 600 sq ft) with no windows that’s a shared shop with an excavating company. And while they’re lovely people, trying to do focused work amidst the soothing sounds of welding and dump trucks (oh and it’s right at the end of the runway at the airport) just isn’t working for us. Because we can’t fit our inventory and our team into 600 sq ft, our team of 3 works in 3 different locations. Our team needs to grow, but I can’t begin to make that happen until I know that we have a place to grow in. And when we’re doubling year over year, that place needs to be able to last us a little bit.
While this is certainly a challenging way to run a business, the purpose of sharing this isn’t to complain. We’re making it work, and we’re doing fine. Mostly. It’s to tell you what’s been going on behind the scenes and let you know that the CSA was not for nothing – we WILL be using the funds to do something amazing. Hopefully soon.
There’s also a hope that, by sharing this, *perhaps* someone out there has a space they wish to rent or sell that can give this dream some solid legs. Space is the biggest piece to the puzzle of growth for Youer. We have done significant work planning out how we’ll use the space, what we’ll make where and what our plans for the future are. But we’re not seeing a great future in our mini windowless warehouse. If you, or anyone you’re connected to, know of space that might be cool for us in Missoula or Ravalli county, reach out – I’d love to chat more. As always, thanks for your continued support of this business that might be small but has huge dreams.