Patio Vibes: Is It Necessary For Business Success?

For many businesses, the ideal commercial property goes beyond just four walls and a roof. A coveted feature for restaurants, cafes, and even some office spaces, an outdoor patio or balcony can add a whole new dimension to your business. Studies by the National Restaurant Association show that restaurants with patios can see a revenue increase of 10-30% during good weather months. In places like Colorado, where many of us love to be outside, having a patio can significantly increase your foot traffic and appeal for customers.

Outdoor spaces can be great for offices as well. Studies show that access to outdoor areas can improve employee morale, creativity, and even focus. But before you get swept away by visions of happy customers basking in the sunshine, let's evaluate the financial implications and other considerations.

Costs

While patios and balconies add a great feature to many retail or office spaces, this amenity comes at a cost. The current standard is to add the square footage of the patio or balcony into the rentable square footage of the premises. Since most commercial leases have rents based on a square footage calculation this can significantly increase costs.

In 2017 and again in 2020, the Building Owners and Managers Association (BOMA) changed the regulations to say that landlords could include ground-level patios, balconies, and rooftop terraces in square footage calculations. However, not all landlords have updated to these standards. It is always best to ask questions of the landlord or leasing agent to best compare costs.

Beyond added rent costs, there's also the cost of outfitting the space itself. Furniture, weatherproofing, heating or cooling (if applicable), and potentially permits for things like awnings or music all need to be factored in. Remember, outdoor furniture takes a beating from the elements, so plan on replacing or repairing it periodically.

Changes in Regulations

In pandemic times we saw many outdoor spaces, like sidewalks, parking lanes, and even whole streets added as additional seating options for restaurants. Since then some of these spaces have become permanent fixtures. However, with many of these areas being implemented on an urgent need basis it is important to evaluate if that outdoor seating area can remain indefinitely — especially if it is important to your business model.

Environment

Evaluating the amount of time that your patio or balcony can be used because of environmental factors is very important. Depending on the location and direction your outdoor space faces, it may be a great spot to sit in the morning but unbearably hot in the afternoon. If you are in an area with a significant amount of bugs during certain months or especially harsh winters, the use of the outdoor space may be very limited and not worth the cost.

Neighbors

When evaluating an outdoor space for your business, it is important to consider your neighbors. If there are smells coming from an adjacent building or too much road noise or other distracting sounds, such as trains, planes, or construction equipment, it can significantly impact your customers' or employees' desire to use the outdoor space.

Layout and Access

Outdoor spaces can create extra challenges for hospitality businesses trying to maintain a level of service and cleanliness if the patio is not easily visible or accessible to wait staff. Additionally, a restaurant's ability to get a liquor license may be affected by the patio if it does not have a direct access point from the restaurant or meet other regulations.

There's no one-size-fits-all answer to whether outdoor space is right for your business. It depends on your budget, location, and industry. By carefully considering the costs and benefits, you can decide if creating patio vibes is the key to unlocking your business's full potential.

If you have more questions about patios or anything else regarding commercial real estate, get in touch.