Retail and Office Leasing – What’s the difference?

There are many different types of commercial properties, and it is a common point of confusion among business owners and entrepreneurs when considering which option is right for their business. Understanding the nuances of each can make a big difference to the success or failure of a business. In this article we will compare and contrast office and retail leased space.

Visibility
Visibility is the number one driving factor behind the decision to lease retail space. If your business is one which relies heavily on foot and vehicle traffic to drive sales, retail is most likely the right choice. Keep in mind that rental rates in a retail property will increase as the location improves. A busier intersection with a higher “cars per day” count will mean more visibility for the location and every business within it. It is crucial to know how your customers find your business and situate your operations accordingly.

Customer Profile
The type of customer you are catering to will make a difference in selecting either a retail or office space for your business. If your business is primarily B2B and you are targeting customers in a commercial setting an office space may be the right fit. Conversely, if you are selling products or services aimed at a consumer in a personal setting you may find retail the better option. The target market and demographics of a given location should be a key consideration when making this decision.

 

Some helpful things to know:

1. As a general rule, rental rates for a retail space will always be more expensive than for a comparable office space in the same location. It pays for a business to thoroughly review and understand where and how new customers are procured prior to making the investment in retail space.

2. Tenant improvements to a lease space are much more likely to be covered by the landlord in an office building versus a retail property. In retail you may have an allowance to start, but it is not likely to be sufficient to complete the entire build out required. Market conditions and the vacancy in a given property will play a role in this as well.

3. It is always recommended to seek professional representation when leasing commercial space, and it pays to hire a commercial broker that specializes in the type of space you need. The market dynamics, rates, vacancies, and many other details vary widely between office and retail space. Choose a professional that is well versed in the type of property you are seeking.

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