Let's assume my article, Is Owning a Store
Your Dream? (then act like it), didn't scare you off the prospect of
being your own boss and answerable to no one (but your creditors). Now your
next step is to locate and lease space for your shop.
When you first hear some quotes on prices, you're liable to panic. 36 dollars
a square foot? Are they mad?
Calm down - commercial real estate prices are always quoted in yearly figures.
Why? who knows why. That's just the way it is. So $36 per square foot per
year becomes a much more manageable $3 per square foot per month.
Yes, that means your tiny little thousand square foot boutique is going
to cost $3000 a month to rent. This doesn't include any utilities, and any
joint fees that may be associated with the development you are considering.
Association fees may include trash pickup and lighting the shared parking
lot and any number of other amenities enjoyed by the group of businesses in
the same development. These fees can be another $500-1000/month, so find out
what the fees are before signing any leases.
Depending on your area, commercial real estate may lease for more or less
than this - it can be considerably more in very busy downtown areas where
you can be sure of a healthy amount of foot-traffic. In small towns or marginal
downtown areas, it can be significantly less. Remember, though - you get
what you pay for. If the rent is amazingly cheap, there's probably a very
good reason.
So you're probably asking yourself, how on earth do the big behemoth stores,
the Giants and the Walmarts, manage to afford to pay such huge rents? And
that's the Dirty Little Secret.
They don't. The great big grocery and discount stores either pay a very
minimal, token rent, or they pay no rent at all. Because they're the 'draw',
the 'anchor store' that will make the entire development succeed, you see.
So to ensure that they can lure an impressive enough anchor to their development,
the mall or strip developer will offer them a huge break on their lease, making
up for it by artificially inflating the rent of all the tiny little shops
that will share the space.
Fair? Well, it depends on whether or not you subscribe to the theory that
'anchors' are actually a draw to ALL the stores in the development, and
thus worth it to the other small business owners who are subsidizing them.
And I think any merchant that has ever had to share a parking lot with a
Walmart probably has a better take on that issue than I do.
|
