Are you thinking about opening up a retail store and wondering how much it would cost to rent a space in the mall? Renting a store in the mall can be a great way to attract a large customer base, but the cost can vary depending on several factors.
We will explore the average cost of renting a store in the mall, the factors that affect the price as well as the risks of owning a store in a shopping mall.
How Much Does It Cost to Rent a Store in the Mall?
The cost of renting a store in the mall can be tricky to pin down, as it depends on several factors such as location and size. Typically, malls charge rent per square foot, with prices ranging from $18 to $30 and above. To get a better idea of the cost, it’s important to inquire about shorter-term leases and find out about additional fees like insurance and deposits.
Take the Mall of America in Bloomington, Minnesota, for instance, which is one of the largest malls globally and charges a base rent of $2,500 to $9,000 per month. It’s always wise to do your research and negotiate favorable lease terms before committing to a rental space in the mall.
What Are the Different Factors That Affect Pricing?
Renting a store in the mall can be an expensive undertaking, but the price can vary depending on various factors. As a business owner, it’s essential to understand these factors to negotiate a favorable lease agreement that meets your needs and budget.
The location of the mall is one of the most significant factors that affect the price of renting a store. Malls in prime locations such as busy shopping districts or downtown areas typically charge higher rent than those located in less busy areas.
Malls situated in areas with high foot traffic, accessibility, and visibility are more likely to attract customers, making them desirable for businesses. Therefore, mall operators charge a premium for these prime locations.
The size of the mall also affects the price of renting a store. Generally, larger malls charge more rent than smaller ones due to the higher foot traffic and the number of customers they attract. A larger mall provides a more extensive customer base, leading to more sales opportunities for businesses.
However, smaller malls can offer a more affordable option for small businesses with a limited budget.
Store Size and Configuration
The size and configuration of the store also affect the price of rent. Malls charge rent per square foot, and larger stores are typically more expensive than smaller ones. Additionally, stores with an irregular or unusual layout may also command a higher rent as they require more effort to prepare and maintain.
Conversely, standard-shaped stores are more straightforward to prepare and require less maintenance, leading to lower rent.
The length of the lease is another factor that affects the price of renting a store. Typically, a longer lease term translates to a lower rent cost, as mall operators prefer the stability and consistency of long-term tenants.
Conversely, short-term leases, such as month-to-month rentals, tend to be more expensive as they offer less security to the mall operators.
The tenant mix refers to the types of businesses that occupy the mall. Mall operators often aim for a diverse mix of tenants that complement each other and offer customers a broad range of shopping options. For instance, a mall may have anchor tenants such as department stores or supermarkets, which draw in customers, while smaller stores offer niche products or services.
Depending on the tenant mix, rent may be more or less expensive. For example, if the mall has many high-end retailers, the rent may be more expensive to reflect the mall’s upscale image.
Operating expenses refer to the costs incurred by the mall operator to maintain and manage the mall. These expenses include maintenance, security, utilities, and insurance, among others. Mall operators typically pass on some of these costs to tenants in the form of Common Area Maintenance (CAM) fees.
CAM fees can vary depending on the mall and its operating expenses. Therefore, it’s essential to inquire about these fees when negotiating a lease agreement.
Tenant improvements refer to any modifications or renovations made to the rental space by the tenant. Mall operators may offer incentives such as rent abatement or reduced rent for tenants who undertake tenant improvements. However, the cost of tenant improvements may also factor into the rent cost.
Therefore, it’s essential to clarify the scope of tenant improvements and any associated costs before signing a lease agreement.
Why Rent a Store in a Shopping Mall?
Renting a store in a shopping mall is a popular option for many businesses, both large and small. Shopping malls provide a central location with high foot traffic, making it an ideal place for businesses to connect with potential customers.
Shopping malls are designed to attract customers, and they typically receive high volumes of foot traffic. Customers visit shopping malls for various reasons, such as shopping, dining, or entertainment, providing businesses with a steady stream of potential customers.
This foot traffic can translate into increased sales opportunities for businesses renting stores in the mall.
Shopping malls are typically located in prime areas with high visibility and accessibility, making them easy for customers to find. Additionally, many shopping malls are located in bustling areas, such as downtown districts or near major highways, making them convenient for customers to visit. As a result, businesses that rent stores in malls can benefit from the mall’s prime location.
Renting a store in a shopping mall can provide businesses with a significant amount of brand exposure. With high foot traffic, businesses can take advantage of various marketing and advertising opportunities to showcase their brand and products or services to potential customers.
Additionally, shopping malls often hold events and promotions that businesses can participate in, providing additional exposure to customers.
Security and Safety
Shopping malls are known for their security and safety measures, providing customers with a safe and secure environment to shop and visit. As a result, businesses renting stores in shopping malls can benefit from these measures, which can help build trust and confidence among customers.
Additionally, malls typically have security personnel on-site, which can deter potential theft or vandalism, providing added protection for businesses.
Shared Services and Amenities
Shopping malls offer a range of shared services and amenities that businesses can take advantage of. For instance, malls may provide shared restrooms, parking facilities, and security services, among others.
Additionally, malls often offer shared marketing and advertising services that businesses can utilize to promote their brand and products or services. These shared services and amenities can help businesses save money while still benefiting from the mall’s resources.
Renting a store in a shopping mall can provide businesses with flexibility in terms of lease agreements. Malls typically offer a range of lease options, such as short-term or long-term leases, which can accommodate different business needs.
Additionally, malls may offer flexible lease terms, such as the ability to expand or downsize the rental space as business needs change.
Shopping malls attract a diverse range of customers, providing businesses with the opportunity to reach a broad customer base. Additionally, malls often have anchor tenants, such as department stores or supermarkets, which draw in customers and can increase foot traffic to smaller stores.
By renting a store in a shopping mall, businesses can take advantage of these customer demographics to reach potential customers.
What Are the Risks and Challenges of Owning and Operating a Store in a Mall?
While owning and operating a store in a mall can offer many benefits, it is not without its risks and challenges.
One of the primary risks of owning and operating a store in a mall is the high costs associated with it. Renting a store in a mall can be expensive, with prices varying based on location, size, and other factors.
Additionally, businesses may be required to pay additional fees, such as insurance and deposits, which can add to the overall costs of operating a store in a mall. These high costs can put significant financial pressure on businesses, particularly if they are new or small.
Shopping malls are home to many different businesses, which can create intense competition for customers. Business owners must compete not only with other stores in the mall but also with other nearby businesses.
Additionally, anchor tenants, such as department stores, may attract a significant amount of foot traffic, making it more challenging for smaller stores to attract customers. As a result, businesses must be prepared to compete aggressively to attract and retain customers.
High Turnover Rates
Shopping malls often have high turnover rates, with stores frequently opening and closing. This can be a risk for businesses that have invested time and money into their store, as they may need to relocate or close down if the mall’s foot traffic or demographics change.
Additionally, high turnover rates can make it challenging for businesses to establish long-term relationships with customers, making it more difficult to build brand loyalty.
Dependence on Mall Management
Business owners renting a store in a mall are often dependent on mall management for various services and support, such as marketing and advertising, maintenance, and security. If mall management fails to provide adequate support, it can significantly impact the success of the business.
Additionally, mall management may have strict guidelines and regulations that businesses must follow, which can limit their ability to operate the store as they see fit.
Shopping malls may experience seasonal fluctuations in foot traffic and sales, particularly during the holiday season. This can make it challenging for businesses to plan and budget accordingly, as they may experience significant drops in revenue during slower months.
Additionally, businesses may need to adjust their marketing and sales strategies to take advantage of seasonal fluctuations, which can be time-consuming and costly.
The cost of renting a store in a mall can vary greatly depending on location, size, and other factors. By understanding these factors and carefully considering the risks and benefits, business owners can make informed decisions about whether renting a store in a mall is the right choice for their business.