I'm Confused On How Rent For Businesses Is Calculated...?

Business By mom2spunkynbug Updated 28 Jan 2010 , 8:48pm by cakesweetiecake

mom2spunkynbug Posted 24 Jan 2010 , 8:23pm
post #1 of 6

So I am looking to move out of my licensed home shop, to a regular retail shop. There are lots of opportunities out there (meaning, vacant locations)...but I am confused as to how the rent is calculated.

I emailed one property - in a very nice location...I figured it would be high...and I received the response:

The asking price for the spaces is $11 sq. ft. per year plus $3 sq. ft. for CAM per year plus heat and electric. There are many options for the amount of space you may need. If you have any questions or would like to take a look at all of the spaces let me know. Thanks

He said that the spaces available are 914 sq. ft to 15,000 sq. ft. So if I chose the 914 area, the rent would be total $11,882 per year? And what is CAM?

I would LIKE an area that includes a front space to display dummies, register, and a few tables & chairs for eating...two meeting rooms (or at least one)...and of course the back baking/decorating area.

Are these rates reasonable? Any suggestions...thoughts would be appreciated!

5 replies
CakeForte Posted 24 Jan 2010 , 8:35pm
post #2 of 6

CAM = Common Area Maintenance

CAM: Common Area Maintenance. Associated with CAM is CAM fees. For NNN leases, the term CAM fees refer to the money tenants pay landlord to cover property taxes, insurance and maintenance.

Some places have the NNN.

Triple Net (NNN) lease: lease in which tenants pay base rent plus property tax, insurance & CAM fees. Absolute NNN lease is NNN lease that tenants also pay property management fee.

Your rate would be $14 PER sq. ft.
So 914 sq ft would be $1066.11/ month for just the shell space.

I'm finishing out my own space....but for me it is still WAY cheaper than the finished out spaces. Each one I looked at STARTED in the 3k range. After a few years it increased.

mom2spunkynbug Posted 24 Jan 2010 , 8:45pm
post #3 of 6

Thanks for your responses CakeForte icon_smile.gif

What do you mean you are finishing out your own space? Are you talking about a blank, empty space vs. a space that used to be a bakery?

There are many vacant locations around here, but only one of them used to be a bakery. And that place is WRECKED. I mean, it would need a TON of work - it's been empty for YEARS. But, I think it's in a great location, and it is a single building standing alone. I think they are trying to sell it. I haven't called to see what the asking price is on it yet. I peeked through the windows one day and OMG...literally the ceiling was falling onto the floor, windows were broken, weeds growing up all along the building, looked like a bad mold issue on the far back wall, walls had missing (messy, demolished) doorway/frames. I know the city would probably appreciate someone doing something with that lot to clean it up & bring more business to the city!

Actually...there is a grant that the city gets (I just read about this) it's several million dollars to improve the city. When I was reading about this I was thinking about that building...and me needing money for a store. They are about to renew the grant & wanted to know what people thought the money should go towards.

Geez, I really need to get my butt in action with that business plan.

CakeForte Posted 24 Jan 2010 , 9:01pm
post #4 of 6

Yes, that is exactly what I mean. My space is just a shell - generic office space w/ a warehouse in the back. I have to put everything in.
Yes it's a lot of money...but that money I am spending would have been eaten up in rent if I went with the other locations that I had looked at. Now I get to have the kitchen exactly the way I want it...I just have to wait a little bit longer.

Do your research on the space and see if it would be worth it in the long. There could be a reason it's been empty for that long. Or it could be a diamond on the rough.
I've found that city codes change all of the time....so the plumbing and electric in that place might need a complete overhaul.

Anyway....those are just scenarios..research it and you'll find out if it's a good fit.

mom2spunkynbug Posted 26 Jan 2010 , 12:49am
post #5 of 6

O...M...G... icon_eek.gif I just found the place online (the old bakery building that is a complete dump)...they are asking $400,000 for it!!! icon_surprised.gificon_eek.gificon_confused.gif

Of course they have pictures of it when it was in use & looking "normal" - it does NOT in any way shape or form look like that now!!!

So I am just going to forget about that for now. It also has about 7,900 sq. ft - so even if I tried to work out some sort of deal, that's a LOT of space to be paying for.

On the other hand....I looked at some vacant spaces today in a building on a main street, and the 800 sq. ft. area seemed to be ok to start in!

cakesweetiecake Posted 28 Jan 2010 , 8:48pm
post #6 of 6

Is there a way to find out what the rate per square foot is in a specific area? I found a place that happened to be availalbe for sale. I spoke to the realtor and he stated that the owner is willing to lease the space. He gave me the lease amount. However, it seems kind of high considering the location and the size of the place. Unfortunately, there are no other places on the market in this area for lease for me to compare.

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