Demographics and location continue to drive physical plant values

November 30, 2023/Business/

There is no doubt that the value, in totality, of your funeral business not only will come from your operations, but the location of your physical building as well. Demographics, whether it be influx or outflux, as well as the nature of your community may change the value of the funeral home physical plant more than you are aware.

Today we will take a look at changes in values and/or demographics that have contributed to funeral homes closing or moving from their present locations. Take a look at the city of San Francisco, California, for instance. According to this article from Medium, for most of the 20th Century there were over a dozen funeral homes on the Valencia Street corridor in that city. . . today only two of those remain.

Quite frankly, the value of property in that locale became so valuable that it was an easy proposition for family mortuaries to be sold for the real estate only. One mortuary that remains, Duggan’s Funeral Service, moved off of Valencia Street in 1932, but remained in that corridor of the city. . . . However, according to the article, “(the) business is quiet, more like it was in the 1970s. . . . (The funeral home) makes most of his money from a cluster of other death-centered businesses, including a crematorium in Benicia, the Chapel By the Sea funeral home in Pacifica, and College Chapel Mortuary, an online service that provides low-cost cremations.

Another Demographic Change — I recently noticed that the Godbout Funeral Home on West 7th Street in the community of St. Paul in my home state of Minnesota was sold and has become the venue for a restaurant, pub, and escape room. Up until the past decade or so, that area of St. Paul was home to a large blue collar factory working population that would have been the historical clientele of the funeral home.

This article from Food Service News telling of the transformation from funeral home to escape room and restaurant mentions that “The West End venue is in an area with more than a dozen bars, restaurants and breweries. Neighbors have objected about the number of establishments already in the area. The conversion, however, is a sign of the times in St. Paul, where parts of breweries, manufacturing plants and even a former mattress factory have become places to eat and drink. A distillery in the former King Coil mattress factory opened recently.”

The former Godbout Mortuary. . .now the Lodge of Lazarus Crow restaurant/escape room

Today, the demographics of that area have changed to a more commercial rather than residential community and those that continue to live in that area probably choose cremation as a disposition in more than 70% of deaths. So, I’m guessing that a large and expensive to operate facility would have difficulty in creating a positive cash-flow as a traditional funeral home.. . . .However, as a restaurant and escape room investors must feel that there is more value.

Related information — Here is a video news story of the makeover of the Godbout Mortuary to the restaurant/escape room now known as the Lodge of Lazarus Crow. (Editor’s note: An interesting name when you think of a former funeral home and that “Lazerus” was the Biblical person raised from the dead)

Funeral Director Daily take: If you are a funeral home property owner I think it is really important to look out ahead a few years and try to imagine what your business operating facility and area may become. You don’t want to be caught operating a large and expensive funeral facilty in an area that is having major demographic or community change that will be detrimental to a large facility.

Many times, however, if you can see it coming, there may be a chance to sell the real estate for an enhanced price and use those proceeds to relocate to another area which might be more demographically advantageous to your firm. That tactic has been successfully used by many metropolitan funeral home brands located in major markets in putting expansion branches in the suburban areas.

Even if you are in a relatively small community you should be doing this exercise. In a relatively small community your brand should be well-known to the point that there may be diminishing returns from being located on a major, high-traffic location. There may be other businesses who value that location and its traffic at a higher monetary value than you do. . . . Sometimes a sale of a high-value location could give the funeral home operator cash to build anew in another area of the community that might be more conducive to a modern funeral home in this era. It’s something to think about, especially if you are in an out-dated facility on a high-value location.

Related article — Former funeral home building sells for $8.8 million

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