How to Budget for a Retail Space in Maryland
Retail is the largest private sector employee in the U.S. In Maryland, there are 68,283 retail establishments and 755,679 jobs supported by retail (National Retail Federation). For new retailers, it can be challenging to evaluate and predict start up costs. One of your biggest initial expenses will be leasing a retail space. Here are some tips on how to budget for a retail space in Maryland.
Research Properties
To get an idea of the price range you will be looking at for your retail space, research vacant properties that fit your business needs. Write down all retail spaces that spark your interest so that you can plan to visit them.
When you write them down, also jot down the leasing price. Once you have a list of potential retail spaces, you can calculate the average price and use this to create a budget for your space.
Most listings will post the price per square foot. If a building is $20 per square foot and is 1500 square feet, you are looking at about $2500 per month for rent. It’s always a good idea to budget in advance so that you can have a few months rent set aside along with other business expenses.
Review Lease Terms
Often times, when leasing a retail space in Maryland, landlords will also give you the responsibility of handling costs of doing business. You want to carefully review the leasing terms of the retail space you are interested in so that you are aware of any additional costs.
The three most common charges that can be added to your base rent are:
- Common Area Maintenance (CAM): The costs that the landlord has to pay to maintain the facility itself i.e parking lot maintenance and lighting
- Property Taxes: In Maryland, landlords are required to pay Business Personal Property Taxes. This typically includes equipment, furniture, fixtures, inventory, and supplies.
- Insurance Premium: While you should have your own insurance policy to protect the property you have in your retail space, landlords have a separate insurance policy. This policy protects him in case of any damage while you’re leasing the space.
A lease that requires you to pay all three of these costs in addition to rent is referred to as a “triple net” lease. You want to be very thorough when reading through lease conditions because you don’t want to unknowingly sign a lease that requires you to pay all of these fees.
Carefully reviewing and analyzing lease terms can assist you in planning an effective budget for your retail space.
Contact Newspace Commercial Today for Your Commercial Real Estate Agent!
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