Like residential areas, the rent of a retail space depends on the size of an area, its style, location and the length of the lease. There are also major differences between these spaces. For instance, many retail spaces have a rent fee that varies depending on your store’s sales: The better your store does, the more you must pay. Sometimes your rent is a percentage of your monthly sales, and sometimes it is simply a fixed monthly fee.
The city and state in which your business operates will have the greatest bearing on how expensive rent will be at your retail space. For example, in Los Angeles the average asking price per square foot for retail spaces, as of May, 2011, is $27.74. In St. Louis, by contrast, the average price per square foot is $14.35. Find the average for your city by using the link in Resources. Also, the location within your town will determine your rent cost. Some governments offer you a discount on rent as an incentive to set up shop in underdeveloped areas, says the Small Business Administration.
When you choose the specific location of your store, there are many options to consider. Do you want to set up shop in an indoor mall, strip mall, standalone building, kiosk or cart? According to Jan Kingaard in an "Entrepreneur" article, rent for spaces in shopping centers is usually about four times the price of rent for a kiosk or cart. The quality of the space itself should also determine how much it costs. A retail area in a new strip mall is likely to be significantly more expensive than an area in an older or run-down building.
The cost of your retail space is usually determined by its number of usable square feet. Usable square feet includes the shopping area, office, storage and docking area if applicable -- try to minimize the cost of your rent by using space efficiently. If your business is just getting started, it may be difficult to obtain larger space, says Kingaard. If you have had a bricks-and-mortar store in the past and a proven high amount of sales per square foot, you are more likely to be able to obtain a larger, more prestigious space.
Because there are no standards for commercial leases, you will always be able to negotiate the price of a retail space. If you agree to a longer lease, you should be able to obtain a lower rent price. Also, your landlord may be willing to offer you a discount if you make improvements to the space or if you provide documented proof that the area has lower foot traffic than expected. A difficult economy may also allow you to obtain a lower monthly rent. If you feel uncomfortable with negotiation, don’t hesitate to hire a lawyer: Obtaining the best deal available on your retail space and having a clear set of terms on your lease will make your business far easier to operate and maintain.