Monday, August 10, 2015

Three Years Down, One Very Big Year Ahead

Though we had been conducting online operations for some months before that day, on Friday, August 10, 2012, Desert Sky Games (not yet "and Comics") opened its doors to the public at 2531 South Gilbert Road, Suites 106 and 107, in the Town of Gilbert, Arizona.

As you've seen in this blog, I have been in the hobby game trade since 1998 in various roles, but I had been on an extended hiatus since finishing law school in 2006 and focusing on my work with the Arizona Department of Health Services and on my developing family.  Planning for DSG started in August 2011 when the venerable Atomic Comics chain abruptly closed all four of its Valley locations without warning.  Upon learning that their closure was not sales-related, and seeing that Magic: the Gathering and board games were on an absolute tear nationwide, some friends and I decided it was time for us to re-enter the trade.  The entirety of the fraternal-twin suburbs Chandler and Gilbert, with a combined population well over 500,000 people, had zero game stores within their mutual bounds.  The coast would never be clearer.

The original plan was to open a high-end board game and MTG lounge where people would play in a premium environment.  It was what we in the development group personally preferred, and seeing places like Cafe Mox, Enchanted Grounds, and Black Diamond Games told us that it was probably viable.  In retrospect, this was a mistake; though many players say they will pay for a premium experience, few actually do.  That's okay.  We had to adapt and we did.  We have since moved to the hybrid model including comics, and continued building out support of the full spectrum of games.  A significant part of our success today comes from players of games other than Magic who know we will run organized play for their game using the official sanctioned materials.  Many stores don't or won't.  If it isn't Magic, many stores don't want to spend any time on it.  So, rather than focusing exclusively on high spenders, we focus on the welcoming aspect, on making the store approachable and comfortable without having people feel like they're in an expensive restaurant.  We don't want to be a gamer pit either, but rather a mid-range "Mario" of tabletop entertainment.

So, throughout late 2011, while players cracked Innistrad booster packs, we scoped out all manner of suite frontage around town, including Atomic Comics's old suite at the Chandler Fashion Center mall.  Unfortunately, landlord Macerich Westcor had higher ambitions in terms of the revenue from that space, and it was breakpoint rent to boot, so we let that opportunity pass.  In retrospect, although I don't know how we'd have survived from then to now in that space, I would utterly love to have it today.

Ultimately what appeared to be the best combination of factors came to us from De Rito Partners and the location we're in today.  There were plenty of mistakes in that process but mostly we came out of it solid.  We have 2400 square feet, and it was a vast expanse in 2012 but is far too small now.  The lease ramps, but averages ~$11/sf for the length of it.  Of course this means we paid no rent for the first six months and we're at ~$17 plus triple-net now, a total near ~$25/sf.  Yee-owch.  But it got us into a building where we have fantastic street presence, good neighbors (even the massage joint), excellent geographic coordinates, and an area demographic that's still so good it seems like the numbers have to be fudged.  Nope, they're real.

It was the building we needed in order to make DSG a reality and make it fly.  Now, as we enter the stretch run of 2015, we have the luxury of deciding on a new long-term landing destination.  This autumn, while we engage in what promises to be our best holiday season ever, we'll also be setting up our next lease.  Due to permit hell and buildout time-frames and the like, this process will take us at least through our fourth anniversary or thereabouts, so about a year.  We will then be in the final year of our current lease, and we can open up the new location and overlap for a while before winding up business at our current digs.

We've actually been working on moving for a while now.  We had a few-strings-attached lease opt-out clause that matured in March and we could have left right then and had it work.  There was an unused Blockbuster Video building a mile away that had come out of receivership.  It was 5000 square feet for about the same rent we're paying now.  A deal among deals.  We contacted them to offer tenancy but Verizon beat us to the punch with their LOI.  (Though they still have not opened.)  Because the space was so ideal -- it was even built out just the way we would have wanted it -- we had all our eggs in that one basket and did not look elsewhere.  This is also partly unavoidable.  If you're looking for commercial property, they expect you to be able to commit if they meet the terms you solicit.  If you flake out on them, they won't take your calls the next time you want to make a move, and you'd better believe these landlords tend to own multiple plazas.  Tire-kickers are not welcome in the world of commercial real estate, which is why often you work with a broker.

It was disappointing to miss out on the Blockbuster Video location, but the prospects and opportunities abound and are almost too many to keep up with, despite our very narrow set of need criteria.  We've looked at 4,000-square-foot mall space; we've looked at 8,000-square-foot rehab retail plaza frontage, and we've even looked at a staggering 25,000-square-foot mixed-use warehouse in a nearby industrial park.  The rent on that behemoth is actually only about double what we pay now, which if it weren't for the high buildout cost, would make "going huge" the obvious winning play.  But each of the spaces we've prospected is promising in its own specific way.  And depending which way we go, the next evolution of DSG will be partly adapted to that usage.

It's too soon for me to say what the outcome will be, but when it does happen, I can't wait to share it.  The bottom-line goal is to make Desert Sky Games and Comics the best store it can be for those of you who call it your tabletop game or comic collecting home-away-from-home.  The non-negotiables that the new space absolutely needs to have are a much greater space for gameplay, and a location that's not far from where we are today and remains within easy reach of the freeway.  Beyond that, all options are on the table.

All options, as long as they involve the store being bigger.

In the meantime, thank you all in advance for your continuing patience with our use of the constrained current space we have.  I promise to do everything in my power to fill it to the rim with the Brim of awesome games and comics and fun organized play.

You have given us three awesome years.  I can't wait to see how great the fourth is going to be!

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