Forecasting the True Cost of a Lease: Rent Escalation Modeling for Breweries
Rent that increases at a compounding rate can quietly add thousands of dollars to your total out-of-pocket cost over the course of a lease. That’s why it’s critical to forecast how your rent will grow when evaluating lease options.
Is Your Lease Eating Your Profits? Benchmarking Occupancy Costs in a Small Brewery
Occupancy cost for your brewery consists of base rent and any NNN (triple-net) charges. Comparing these numbers to your annual revenue gives you your occupancy percentage of revenue - a valuable measuring stick for benchmarking. The generally recommended upper limit is around 10%. Anything above that can be a red flag, especially if your revenue has been volatile.
Rent vs Market: How To Know if You’re Overpaying per Square Foot
It’s well worth your time to calculate your dollar-per-square-foot-per-year rate, which is simply your total annual occupancy cost divided by your square footage. Then compare that to local listings. Market rates can shift quickly, especially if it’s been a couple of years since you last negotiated.
Quantify What You Want in Your Next Brewery Lease
Break a potential lease down and calculate its dollar impact per year - then incorporate that into what you ask for when it’s time to negotiate. Things like tenant improvement (TI) funds, exit clauses, and capped NNN increases should be treated as negotiable, not extras. Use anchoring: ask for two or three concessions you’d love to have.