RETAIL LEASING BASICS FOR NEW BUSINESSES

Retail Leasing Basics for New Businesses

Source: Vince Provenzano, Pacific Coast Commercial,  September 26, 2017

A lease is a contract which involves one party conveying land or property to another party in exchange for periodic payments over a specific time. Retail leasing is a major operating expense for companies and can represent 8-15% of your overall gross sales income. It requires strategic planning, analysis and budgeting to ensure the best possible location is secured. San Diego County, as a major business city offers many retail leasing opportunities in many cities within the county.

To make the best out of this activity, businesses in San Diego can follow the steps listed below to rent the best retail leasing space.

-                 Plan your budget

 Retail leasing requires careful planning to know what you can afford. Knowing your budget will help you pick the best retail space for your business at the right price. This amount will probably differ across different areas of San Diego. The monthly lease payment shouldn’t be more than 15% in some cases, but usually no more than 10% of a business’ monthly gross sales.

         Consider monthly impact of lease payment

Considering your monthly lease payment will help your business manage their expenses and profits better. Lease payment will most likely be affected by location, demand, state of the rental space, duration, and competition from other businesses that need retail space.

Types of leases available

Retail leasing comes in different types and different costs. Knowing the type of retail lease that will suit your business best is crucial before choosing a rental space. There are 4 major types which include single net leasing, double net leasing, triple net leasing and modified net leasing. Each leasing type involves sharing the cost of taxes, insurance, and other common area expenses in different ratios between the landlord and the tenant.

         Have different retail leasing options

After considering factors like size, budget and need, having a number of possible retail leasing options is advisable. Having several options will allow you to choose the one that fits best to what you need. To do this successfully, Pacific Coast Commercial has several brokers who can help you locate premium property for your retail leasing needs. Having more than one or two options will also help you negotiate a better deal to fit your needs best.

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