Retail Store Rent

April 12, 2009 at 7:07 pm Leave a comment

How much rent should I pay?  Based on the folks I’ve talked to that have operated a few successful F&B places, the monthly rental should be maximum 30% of what your estimated monthly revenue will be.  Anything above that and you are signing your small business’s death sentence before even starting daily operations.

While that’s well and good, one of the big problems I had was finding out how much a retail or food and beverage unit would cost to rent.  What was a reasonable figure?

I wasn’t able to find a property agent that specialized in retail / f&b outlets. The property agents I spoke to were familiar with office rents which are dramatically different from storefronts.  For example, an office tower may be renting out their office space at 12 SGD per square foot – 15 psf but their retail space will be targeted at 35 psf.

I called up the leasing agents for a few malls in the peak Raffles Place area. (OUB Centre, shops at the Sail, Republic Plaza, those types).  Generally, at the peak of the market (~June 2008), they were asking for as high as 40 psf.  In February 2009 the range was between 33 psf – 36 psf.

Additionally – rents differ based on the size of the unit. For large units, you’ll typically pay less per square foot than a smaller unit.  One shopfront I looked at charged 22 psf for 1,200 ft.  In that same building and floor, it was 34 psf for a 150 ft unit.

These are the “asking rent” of the mall management – it’s all negotiable.  How much lower one can offer and get away with, I don’t know but if someone has reasonable ideas please leave a comment.

For some places you may be able to get a variable rent agreement with the landlord (i.e. rent may be a %-age of your revenue for the month). For the Raffles Place malls I spoke to this was not an option.

From a more “official” source – March 21, 2009 Straits Times:
”Orchard Road prime rents are predicted to fall 15% – 20% by the end of the year.

Current average price is SGD 34.90 psf (per square foot) a month.  Fourth quarter of last year was the first rent fall in the shopping belt in five years.

Prime suburban rents average SGD 28.30 psf per month.  They are predicted to slide 10% – 15% by the end of the year.”

And, if you feel like reading more… here’s a “Market Study on Retail Mall Rental Space in Singapore” by Competition Commission in Singapore, October 31, 2008.

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Entry filed under: Starting-up, Store.

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