RENT CONTROL

PHYDEAUX, 3 stores in North Carolina

A pushy landlord forced him into a tough choice on a key store location he rented. His decision? Never have a landlord again. / BY KENNETH BURNS

“we could not afford to just close one of our three stores,” says Frank Papa, who owns Phydeaux, a small chain of pet stores in North Carolina.

But that’s what Papa faced in 2015. His Raleigh location had opened five years earlier. The 15,000-square-foot shop served loyal customers at the Seaboard Station shopping center, near the city’s downtown.

The time had come to renew the lease. The terms allowed for two five-year extensions. The renewal seemed to be a formality.

It wasn’t.

Citing what Papa calls a “technical” aspect of the agreement, the shopping center’s owner, nearby William Peace University, declined the extension. “I had to report some sales number,” Papa says. “It was relatively minor. It wasn’t financial. It wasn’t that my company owed them any money.” The university had bought the property earlier that year.

He declined a proffered two-year lease without a guaranteed extension. He had six months to move. The clock was ticking. “That was bad,” he says.

Papa made the most of the situation and did what apartment dwellers dream of. He bought his own place, paying $1.48 million for a former hardware store about two and a half miles from Seaboard Station. Buying the property “was something borne out of frustration from a history of having issues with landlords,” he says.

Along the way, he learned that buying commercial real estate isn’t much like buying a house. “I had no idea of the level of complexity of what had to be done,” he says. “That was all brand new for me, so I had to figure it all out.”

The purchase made an already trying situation even more stressful. “Even if I didn’t buy a building, we still would have had to move,” Papa says. “It’s already a tough, very difficult thing to do in six months, and that added another level of complexity to it. It was nerve-wracking.”

Still, owning a commercial property comes with some of the same rewards as home ownership. “Obviously, it was good from a financial standpoint,” Papa says. “Now we’re paying a mortgage instead of rent. Our month-to-month costs are significantly lower.” Also, he says, “It’s really nice owning our own building because we can do what we want to it.”

Raleighs’s new Phydeaux opened Sept. 3, 2015, following a closure of just one day. 

The move had its downsides. Papa had been pondering expansion plans. “We had to, obviously, put those on hold,” he says. In addition, some customers were inconvenienced, because the old site was more accessible on foot and by bicycle.

Papa employs about 12 at his Raleigh store, and about 36 overall. His employees were “really OK” as the moving plans progressed. “I actually had a similar situation years ago,” he says. “Most of them were not around for it, but they were aware. They had confidence I could do it.”

Sounds like a dream coming true.