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Furniture Store Occupancy Cost Ratio

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David,  Is there an industry accepted standard for occupancy cost ratio. I am evaluating a single tenant investment and this would help determine their long term ability to pay rent and remain in this location.
 
Thanks,   Barry

Posted By BarryK, 2/20/2015

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Replies

From markbattles, 2/23/2015  2:24 AM

The higher the costs of goods and labor, the lower the acceptable occupancy costs.

From Russell, 2/20/2015  6:49 PM

Reply From David McMahon At PROFITSystems:

Hi Russell and Barry – I have seen occupancy costs as a percent of sales range from a low of 4% to a high of 15%.  7-9% seems to be a good area.  You need to balance with your add budget as well in an effort to be below 15% combined ad and occupancy cost.

 

There has not been a proper industry study on key ratios for 8 years.  Guess what we are doing one this year. 

 

I highly encourage all to participate and spread the word:  https://www.snapsurveys.com/wh/s.asp?k=142204561858  This is important for the home furnishing industry and all those in it.

Also, Region has less of an effect than urban vs rural. NYC is 18% plus. NY state is 4-6% as an example but it depends on volume growth and sales per square foot.  That should range at a min of $150 to $800, with $400 -$600 being nice

 

David McMahon, CMA, EA | Director, Consulting & Performance Groups 
Certified Management Accountant, Dept. of Treasury Licensed

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