How Much Does Storefront Property Rent Cost?
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How much will it cost to rent a retail space?
The average cost for a 1,500 square foot retail space is between $1,250 to $3,500 per month .
However, rent costs vary highly by area, city, location, and other factors. Most areas have an average price per square foot. A good spot in a popular shopping area might be $25 per square foot, while a less swanky location could be $10 or $11.
What are the cost Factors for rental costs?
Cost factors for rental costs:
- Location - Where are you located? Highly populous areas will generally pay more.
- Budget and Size - Your rental cost will take a big chunk out of your monthly budget so it’s important to stick to a figure you’re comfortable with.
- Shape and Frontage - People tend to judge the store based on what they can see through the windows without entering.
Examples of Rent Costs (by Location)
When you're finding the right space, you have to take into account things like your prospective neighbors and the infrastructure of the building. And if you're doubling as a storefront, you have to think about how accessible the location is to your customers.
Here are the average square footage costs per city :
|City||Average Cost Per Square Foot||How much does $5K get you?|
|New York||$74||811 sq ft|
|Boston||$30.40||1,974 sq ft|
|Seattle||$32.10||1,869 sq ft|
|Houston||$28.34||2,117 sq ft|
|New City||$28.34||2,117 sq ft|
How To Find A Place To Rent For Your Business
Here are a few of the best platforms to find a space to rent:
What percentage of my revenue should be rent?
It is recommended to spend only 5 to 10% of your gross sales on rent .
Rent percentage calculation:
To determine the annual cost of your rent, divide the annual rent by your gross annual income.
For example, your annual rent is $125,100 and your gross annual income is $1.96 million, you would divide $120,100 by $1.96 million.
Your total would come to 15.67%.
This means for every $1 your company earns, 16 cents goes to your rent.
What are the hidden costs of renting a retail space?
Renting a retail space can be unnecessarily expensive if you don’t understand the hidden costs and restrictions that are buried in many leases. Understanding what kind of retail space reflects your budget allows is just as important as understanding the different kinds of lease structures.
- NNN Expenses - The landlord will not only charge you a base rental rate, but also passing to you the expenses of property taxes, building insurance and maintenance of the area as well.
- Utilities - Basic needs for you business to operate such as electrical, lighting, water and ventilation.
- Marketing - Marketing is important for you to consider and how much you want to spend for it to promote your business is up to you.
Alternatives to Renting Retail Space
Fortunately, renting a commercial space is not the only option for your retail business. In fact, there are lot several options for you to think of.
- Co-working Space - Based on retail spaces in your locality, the membership includes a fix seating arrangement, access to the common conference areas, office events along with other perks.
- Small Business Incubators - You can contact your local government on active business incubator offices for a discounted rental.
- Work out of home - Instead of renting a retail space, you can work from home by having a dedicated office column in one of your room.
Contributors to this article:
- Pat Walls, Founder @ Starter Story
- Samantha Walls, Head Of Content @ Starter Story
- Azhi Janulgue