Making the leap from e-commerce or need a physical presence for your business? Here’s a commercial renovation cost guide to get started
Designer Rebecca Taylor store project by Sweeten contractor David
Opening a physical brick-and-mortar store is a bold and energizing step. It’s a chance to create a walk-in version of a business you’ve been growing, or a tangible realization of a long-awaited vision to be your own boss.
The cost of opening a retail location for, say, a clothing, beauty boutique, or art gallery can slide from pricey to economical depending on what you want. Chain Store Age’s annual survey of retail build-outs put the average cost at $56.53 per square foot. If you use that formula, then it will cost $280,000 for a 5,000-square-foot store build-out. In another example, an entrepreneur in Austin, Texas, only spent $7,650 on a build-out for Little Green Beans, a children’s consignment store for clothing and toys, according to Inc. (The business owner’s breakdown of costs were: $4,000 construction to customize the space, $3,500 for shelves, racks, etc., and a mere $150 for a handyman).
Don’t be too overwhelmed by this figure. As the name suggests, the above survey takes into account bigger stores that are more commonly found in malls than a Main Street space in an older building. A simple build-out for a smaller store—minor construction, a coat of paint, shelves, and racks—can cost under $10,000. It all depends on the scope of work and what finishes you want.
To figure out this wide world of retail build-out budgets for your project, Sweeten, a free service matching business owners with vetted general contractors, offers a few areas to consider.
Design for a commercial storefront space
If you choose to hire a designer or architect (not everyone does), expect that to take 20 percent of your renovation budget, according to Sweeten architect Carla. That could mean $40,000 in a $200,000 budget.
Retail projects can be as small as custom shelving for storing product, using existing electrical wiring, and applying a fresh coat of paint. With a build-out that basic, you might avoid the need for permits, thus eliminating the need for blueprints to be approved by an architect. However, if you’re serious about optimizing the size of your space and carefully planning the customer experience, then it’s best to bring in the big guns. “What do you want the customers to experience? What do you want them to see when they first walk in?” said Carla. Then there are the more technical design elements like handicap accessibility and whether or not you need a bathroom. These are best handled by an architect.
Electrical costs for a commercial space
The Chain Store Age survey put the cost of interior lighting at $3.30 a square foot. As mentioned above, electrical can be kept simple by using existing wiring and even fixtures to keep these costs down.
Scott, another Sweeten contractor, has worked on retail build-outs where electrical has been as low as $10,000 or as high as $100,000. Splurges in lighting often come from a client wanting specific light fixtures that are in line with their brand. Altering the position of each light to highlight store product or fixing up existing, decrepit wiring could increase your budget for electrical. Once you get into more serious work, your project might also require the additional cost of applying for permits that could also delay your timeline, Scott said.
And it isn’t just lighting that needs to be considered. If your business has additional power needs, such as a salon or a dog groomer with equipment like hair dryers, it is best to assess what power burden your ideal store location can handle before signing a lease. That way, you can either find another location or factor in an electrical upgrade into your budget if necessary.
Plumbing costs for a commercial space
This area of the budget will largely depend on:
A. Is there is a bathroom?
B. If no, then would you like a bathroom?
C. If you have one, will it stay in the same place?
If there is a bathroom, then it is possible to freshen it up with a coat of paint. If there is no bathroom, you should consider if it will help your business and your staff (otherwise they might have to close the store whenever they need to use a restroom). “You want to keep customers in your store rather than give them a reason to leave,” said Scott, on why a bathroom might help.
A very basic bathroom could set you back $3,000 to $6,000, according to Cost Helper. It could attract additional costs if the location is far from water and sewage lines and if you need the help from a structural engineer. A plumbing permit will also be needed. Moving a bathroom will gather similar costs with the added line item of demolition. If your business has unique needs like a washing station for a hair salon, that will be another cost to factor in.
Flooring and ceiling costs
In a retail build-out, flooring on average takes up $2.76 per square foot in a budget and ceilings take $1.81, according to Chain Store Age. If there are no structural issues with the flooring (again, check your lease to ensure the landlord is responsible for these costs), then what you do to the floors will likely just be cosmetic. If that is the case—you’re re-varnishing existing floors or laying some tiles—then the project likely won’t require a permit, according to Colin, a Sweeten contractor.
HVAC costs in commercial spaces
The cost of either fixing, replacing or installing an HVAC system costs on average about $2.61 per square foot or about $13,000 for a 5,000-square-foot space. Like everything else, this average can swing in either direction based on what you have, what you want, and what you can afford.
One way to avoid this cost entirely is to negotiate a lease that puts the responsibility of the HVAC system onto the landlord, according to Colin. As an alternative, you can volunteer to take care of the HVAC system and request that the landlord give you three months of free rent. If it is a simple step of replacing the air conditioning unit with something modern, it likely won’t require a permit, said Scott.
On average, retail build-outs spend almost $10 a square foot on display fixtures or millwork, according to the Chain Store Age survey. That’s roughly 20 percent of an average budget. But of course, it all depends on your vision for your store.
The three factors that determine how expensive your displays will be are material, quantity, and what space they need to fit into, Scott said. The cost of simple wood from Home Depot will pale in comparison to teak from Brazil. Spaces, especially older ones, can also have quirks in them that need to be incorporated into the design of your shelving. “There can be a lot of bends and cuts that you have to fit the wood to,” said Scott. “That can consume a lot of time and add more to the cost.”
Getting to the paint stage means you are close to the finish line. Your walls need to be prepared first, which might be your priciest point, according to Bill, a Sweeten contractor. Another element that will affect your paint budget is if the color is flat, which is generally a better value than a semi-gloss. Also, the darker the color, the more coats of paint you will need, Bill said.
Real-world retail example
To put things in perspective, here is an actual retail renovation budget for a New York beauty salon from Sweeten contractor Paul:
Opening a physical store is an exciting moment for a business. Whether it’s a simple build-out or one with more moving parts, there’s a path for you to bring your storefront into the spotlight.
If you have an office that’s in need of a renovation, whether you want to update an existing space or move somewhere new, we’ve got an office renovation cost guide that’ll help you plan for the future of your business.
Sweeten handpicks the best general contractors to match each project’s location, budget, and scope, helping until project completion. Follow the blog for renovation ideas and inspiration and when you’re ready to renovate, start your renovation on Sweeten.