5 Expenses of Leasing Retail Space

What is leasing retail space?

As you might know, leasing retail space refers to renting services you get from the owner of the building in order to get space for your office or even open a shop in that building. Some people are getting a leasing retail space for opening up a company office, some people want to open up a restaurant and some people are also getting the leasing retail space for opening a shop as well.

If you are not reading this article, you will never know that actually there is more than just a renting expense when you are getting a leasing retail space. Starting today, after you read this article you will get to know that there are five different expenses that you need to know before getting leasing retail space.

What are the 5 expenses that we need to know before leasing retail space?


1. NNN Expenses:

The first expense rather than just your rental fee is triple net or NNN expense. If you are getting a leasing retail space from the owner who requires tenants to pay NNN expenses, that means you will need to spend on taxes, insurance, and other common maintenance expenses as well.

However, to be specific on that, you may need to realize that different owners have different policies related to the NNN expense. Because some owners might require the tenant to spend on only one or two expenses among these three expenses mentioned above.

NNN expenses include:

Property taxes: Usually, the owner of the building is the one who needs to pay the property tax but if your leasing contract includes NNN lease conditions, it means this expense on the property will pass to you as the tenant. What makes this expense so stressful is you will need to pay the fixed rate of the property tax which means you can not negotiate the rate for this expense.

Building insurance: Similar to property tax, if your leasing contract includes insurance expenses then you will need to pay for it too. As part of the retail business, you will need to show proof of substantial insurance expenses to secure your lease agreement in the first place.

This expense is very essential especially if you are getting a big proportion of the building which requires you to pay for the insurance of the building since you occupy much and long enough from the building.

Common area maintenance expense: As you, all might know, the term common area includes the most common spaces that you will need to use when you are getting a leasing retail space. They include “Lobbies, common area restrooms, parking lots, elevators, hallways, landscaping, roof and many more. Since all of these require regular maintenance and cleaning, more or less you will need to pay for this to the owner of the building.

2. Utility expense

Of course, either when you rent the house or apartment you will need to also pay for the utilities as well. It includes both electricity and water usage as well as another lighting, heating, air and ventilation, and more. The utility cost can vary from each other depending on the type of retail space you are getting.

As a smart tenant, you need to check regularly about the amount of electricity you are using by comparing to the previous tenant if you are having a similar business, or type of retail space or by comparing your own usage to your different months of use.

3. Build-out

It usually happens that when you are looking for leasing retail space, there will never be a perfect space for you. When you can find the place, the next step is the restoration or redecoration of that retail space. So spending on building out or decoration is important to make this available space into the shape, or style you need.

Especially, if you are planning to open a shop or restaurant you might need to spend some time and your money to decorate in the style you want. However, in some cases, if the quality of the building is very old or affected by the previous owner, you may need to re-negotiate with the owner by sharing this build-out or repairing expense as well. However, please bear in mind that you will need to be responsible for all of these expenses up-front.

4. Equipment and furniture

Spending on buying new equipment or furniture is a must when you are getting a leasing retail space. You need to be aware of all of these expenses including getting a new desk, computers, and printer if you are having a new office. And if you open a shop then you will need to buy the decorating accessories and others.

One more thing is that most people do not realize or sometimes they did not plan out their budget for this which mostly let them to do impulsive buying leading to spending too much on this.

5. Marketing

It truly makes sense that after you are done with everything you will also need to promote your business after getting done the space. So plan out your marketing budget and include it in your budget cost, it will help you generalize everything beforehand to avoid spending extra on that. And those marketing expenses include social media, pop-up events, collaboration, and more to promote the cause of your business line.

In short, getting a leasing retail space involves a lot of expenses that sometimes you never realize. Therefore, before making a decision to get a lease retail space you need to forecast all the expenses beforehand so you can prepare the right budget for signing our rental contract. Because it seems that getting a leasing retail space will take up a long time in managing and planning everything out.


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