Occupancy cost
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      2. Retail Leasing FAQ
      3. Occupancy cost

      Retail leasing FAQ7: What percentage of my gross turnover should occupancy costs be?

      What percentage of my gross turnover should occupancy costs be?

      • Benchmarks vary among different categories of retail and different levels of turnover (size of business)
      • May be as low as 6-8% or up to 10-12% but sadly, many retail businesses operate at above 20% which indicates either their turnover is too low or their rent is simply too high. Either way, these businesses are operating in a state of ‘financial distress’
      • Aim for no more than 10-12% of forecast turnover when agreeing to a new lease
      • If in a lease and OCR is >18%, you need to make drastic changes including seeking realignment of rent to turnover