Center of Attention/Jewelers fund dream store with shopping center development
[h3]Barron’s Fine Jewelry[/h3]
Address: 1850 Scenic Hwy., Snellville, GA 30078
Phone: (770) 736-8883
URL: barronsfinejewelry.com
New location: 2004
Projected 2005 revenue: $4 million (in jewelry sales)
[dropcap cap=B]old risk or common sense? In 2003, when Nanji, Ajay, and Rakhi Singadia, the father-son-daughter team at family-owned Barron’s Fine Jewelry, set out to build their dream store across the street from their strip-center location, they knew it was going to cost them quite a bit of money.
But even when they realized the land and buildout costs would be $3.5 million — significantly more than their jewelry store did in annual sales — they didn’t blink. As Ajay says, “We knew this was the greatest opportunity of our lives.”[/dropcap]
[componentheading]THE IDEA[/componentheading]
Fast forward to 2005. Barron’s, now located in the Barron’s Tower Place shopping center that the Singadias constructed on that land, will do $4 million, more than twice its annual revenues at the old location. And it’s trending upwards at a 60% clip. The center is generating over a half-million dollars per year in rent from its nine tenants, which include Quizno’s, Mattress Firm, and Moe’s Southwest Grill, the largest restaurant in Georgia by volume. As if all that weren’t enough, an interested party recently tendered an offer of $7.5 million for the shopping center. The Singadias aren’t selling, though: “We don’t want to go back to paying rent to somebody else,” says Ajay.
Of course, the Singadia family never set out to build a shopping center. In fact, the idea at first was to build the store only, which would have required them to purchase two houses in a residential area across the highway from their old location. That way, it would almost be like the store wasn’t moving at all – only going across the street. But there was a rub: Barron’s would have had to have a 60-foot buffer from nearby residences. “It would have been expensive to do that much construction for just a jewelry business,” says Ajay. “It was actually one of our customers who helped us understand: we had to buy at least five of the homes in the area, and build a shopping center, to make it worth our while. There were seven homes in all, so I just told my dad, ‘Let’s just get the other two homes, too.’ “
[componentheading]THE EXECUTION[/componentheading]
Easier said than done. Every home owner had to agree separately to sell their home, and the Singadias had to keep their plans secret so that prices wouldn’t skyrocket. The run-down old homes were only worth about $60,000 each, but an offer of that amount wouldn’t convince these owners to sell. “We paid $250,000 for the first home – a realtor lived there and smelled an opportunity,” says Ajay. “We paid about $210,000 each for the others.”
Once the homes were under contract, Ajay went to the city and asked to do an assemblage on the land, a total of 3.4 acres. “We had to hire an attorney to help us get it, because the other area residents were angry that they were being cut off from the highway – but really, they were miffed because they weren’t bought out,” he says. The attorney fees were $35,000, “a small price to pay for speed” according to Ajay.
Barron’s Tower Place broke ground in March 2004, and opened December 8 that year. The store only closed for one afternoon, moving across the street and opening at 10 a.m. the next day. They did $900,000 in just 15 days before Christmas. “We saw 800 new customers during that time,” says Ajay. “People never looked at us for big sales before – or bridal at all. Now, we’ve got 10-15 customers on a Saturday looking at bridal.”
The store alone is incredible, a beautiful 6,000 square-foot showroom featuring an 85-foot tower outside. Built in the shape of a diamond, the store features in-lit columns inspired by the Delta Sky Lounge, as well as 200-pound door handles customized in Japan with the Barron’s store logo. Ruth Mellergaard of GRID/3 planned three different layouts (a total cost of $45,000), and the Singadias spent $200,000 on the showcases alone.
Although the family spared no expense, they made lots of mistakes along the way, says Ajay. “We hit a rock during construction, when tests had said we wouldn’t. It cost us $80,000 to dynamite the rock,” he says. Additionally, the oversized doors had to be adjusted after they were already built, costing an extra $6,000. Cost overruns eventually totaled $600,000, because, according to Ajay, “we hadn’t done our homework.”
[componentheading]THE REWARDS[/componentheading]
Despite these problems, the project only took two years from start to finish, and the center now boasts some of the highest rental rates in all of Atlanta at $31 per square-foot. The Singadias were required to have 60% of the center leased before the bank would release their loan funds – in just six weeks, Barron’s Tower Place was fully leased. “We have lots of frontage, and are only 30 feet from the highway. Plus, there’s an 80-foot tower staring you in the face,” says Ajay. Additionally, a huge lifestyle center is being planned just up the road, so the area is booming with retail demand.
What’s more, the store has been completely rejuvenated by the new location. “We’ll be at $10 million in three years,” says Ajay. “We’ll have the store, the property, the equity – and we’ll be developing the land behind the store as well.”
Regulations dictated that the land at the back of the Singadias’ property couldn’t be retail space, so they’re building three two-story, 6,000 square-foot office buildings for $450,000 apiece. They plan to sell each for $1.1 million. “All the utilities, electrical, and etc. are already laid in, so these will be much easier,” says Ajay. “And hopefully, the people who go to work in these buildings will walk over and buy jewelry.”
At one point, the Singadias discussed closing the store to focus on their real-estate efforts. “The real estate was worth so much, we almost didn’t build our own store. We could have made $5.5 million on the land alone,” says Ajay. In fact, the profit potential was so huge that they changed their minds three times. Ultimately, they decided to go ahead and make Barron’s part of the new shopping center. “Jewelry has been our passion for the past 30 years,” says Rakhi. “It would be too hard to leave now.”
Ajay agrees. “The store was a great thing to do, but you have to love the business to do it,” he says. Now, the Singadias are looking for ways to make the business more automatic, so that they can continue their involvement in real estate. “We’ve now learned about zoning, we’ve worked with engineers and contractors. We think we can do this again,” says Ajay.
In fact, they have their eyes on another piece of property two miles away. Can they turn lead into gold once more? Ajay thinks they can, and says they’re itching to get out and try it again. “It took two years to get over the learning curve, but it was the greatest thing we ever did.”
[span class=note]This story is from the January 2006 edition of INSTORE[/span]