Costs Associated With Renting a Retail Space
Having strong foundations is essential to starting any business off on the right foot.
But, renting a retail space can be an expensive venture; there are many factors that can increase the costs.
Here are a few of the ballpark costs that you can expect to face when renting your next retail space.
The first cost you’re going to face is rent, and unfortunately this is an ongoing expense.
In most areas your monthly rent is calculated against many factors including the square footage of the space, and the location.
Retail rental rates are based on a price per square foot calculation, so the bigger the space the higher the cost. So, you may not want to be overzealous; if you’re a small business, choose a smaller space to save money.
A commercial space located on a busy highway that is likely to get high foot traffic is going to cost more than a building located on a back street. You may have to consider what you need more, visibility or cheaper rent? It’s a catch-22, but it’s the reality of commercial real estate.
Triple Net Lease
A triple net lease is an easy way for your landlord to pass down many of the additional costs associated with their building, including the costs of common area maintenance, taxes and insurance, to business owners through the lease. This can quickly increase the cost of renting a retail space.
It is important to consider your options and investigate the conditions of other leases in the area in which you wish to rent, however it is important to note that it is more common than not for landlords to use a triple net system.
Let’s take a closer look at the expenses included in this type of lease.
Common Area Maintenance
It is a landlord’s responsibility to maintain the parking lot, lighting, elevators, bathrooms and any other common areas and amenities that are included in the centre. However, since the landlord is not using the space they tend to pass on these costs on to the renters who are.
These expenses should be clearly defined within the lease agreement so you know exactly what you are going to be responsible for and can calculate the associated costs.
If there are multiple people renting the space, for example in a high rise building or shopping centre where you are renting just one space, these expenses will be divided between all the owners/renters.
It is also common for landlords to pass on the cost of property taxes.
The property taxes can include the council rates, land tax, and body corporate fees. As you would expect these piled together can quickly get expensive.
Luckily for you though, as a tenant in a commercial property your rent is tax deductible and you may even be able to claim GST credits.
You can expect your landlord to request that you pay the insurance premiums. This can include public liability to protect the landlord from any damages that may happen while you are leasing the property.
You may also want to consider taking out contents insurance to protect your own products, but this will be on top of the insurance included in the triple net lease.
Some final expenses that will likely be attached to your next retail rental property includes your electricity and water usage. These costs will depend on how often you are in the space and using the utilities.
How to Save
As you can see there are numerous costs associated with renting a retail space and all the dollar signs add up quickly. You may even be starting to think that you’re not able to afford to move into your own space yet.
But don’t put all your dreams on hold just yet, we can help!
At Englander Principal, we specialise in negotiating the best lease terms for commercial leases. We can help you free up cash flow so that you can invest more money back into your business and grow.
We also work on a No Win, No Fee basis so you have nothing to lose.
Winning means that you will secure a rent free period, or half price rent.
So, if you’re looking to move into a new retail space, we’re the people to talk to!
Contact us to save on your retail rent today!