What is a good occupancy cost ratio?
The higher the occupancy cost, the more likely a tenant will vacate. A healthy occupancy cost depends on the tenant type. While a healthy Occupancy Cost Percentage for a grocery tenant might be 2.5%, a similarly healthy Occupancy Cost Percentage for an apparel tenant might be 12%+.
How is mall occupancy calculated?
To determine the occupant load attributed to the mall, the gross leasable area (square feet), excluding any food court and anchor buildings, shall be divided by the occupant load factor (OLF) value determined by Equation 4-1. The occupant load factor (square feet per person).
What is an occupancy cost ratio?
Occupancy cost is the total expense a tenant incurs for leasing a particular building as stipulated in the lease. Occupancy cost is typically shown in a ratio or percentage that is calculated by taking the total occupancy costs for the tenant divided by the tenant’s gross sales.
How do you calculate occupancy cost?
Occupancy Cost = Gross Rent/Turnover x 100 Anybody who’s spent any time around the leasing side of retail knows the equation.
What is a good occupancy cost in retail?
Median occupancy costs at U.S. neighborhood centers are 8% to 9% of sales, while U.S. regional malls typically range between 9% and 16% of sales. A good rule of thumb is the higher the retailer’s markup, the higher percentage of occupancy costs they can afford.
What is retail occupancy cost?
Occupancy cost charges include base rent, outgoings, turnover rent, and promotional contributions, and are net of GST. All other tenant related costs or benefits are excluded.
What is occupancy formula?
Occupancy rate is the percentage of occupied rooms in your property at a given time. It is one of the most high-level indicators of success and is calculated by dividing the total number of rooms occupied, by the total number of rooms available, times 100, creating a percentage such as 75% occupancy.
What is occupancy ratio?
Occupancy rate is the ratio of rented or used space to the total amount of available space. Analysts use occupancy rates when discussing senior housing, hospitals, bed-and-breakfasts, hotels, and rental units, among other categories.
What is included in occupancy cost?
Occupancy costs are the total amount of property-related expenses paid by a tenant for use of a particular space. Occupancy costs include base rent as well as expense reimbursements paid by the tenant such as CAM charges but excludes business operating expenses such as payroll and sales tax.
How is retail occupancy calculated?
o Determine the square footage of your retail area, including restrooms and counter space area (multiply length x width). Do not include storage areas. o Divide this number by 30. This is your occupant load. o Divide the occupant load by 4 (rounding down).
What is occupancy in accounting?
Occupancy costs are those costs related to occupying a space including; rent, real estate taxes, personal property taxes, insurance on building and contents, depreciation, and amortization expenses.
What’s the average occupancy rate for a mall?
Although mall occupancy cost ratios for individual tenants vary by merchandising category, average ratios typically range from 9 percent to 16 percent (see table).
Why is it important to know occupancy cost ratio?
The occupancy cost ratio is an important tool in analyzing regional malls because it helps determine if tenants are paying rents that are above, at, or below sustainable levels.
What happens if occupancy rate is too high?
If the tenant’s occupancy cost percentage is too high, they might vacate their space or require a reduction in their base rent or reimbursements in order to stay. Likewise, if the tenant’s occupancy cost is low, the landlord might have room to raise rents or demand higher reimbursements from the tenant.
What is the tenant sales per square foot?
What is Tenant Sales Per Square Foot? Tenant sales per square foot (Tenant Sales PSF) is the total revenue a tenant earned in a year on a per square foot basis at a given location. So for instance, a jewelry store occupies 10,000 square feet at your shopping center and in 2016 the store sold $3,500,000 worth of product.