Commercial Real Estate

Do you have enough or too much office or retail space?


Doing the math behind how much square footage your office or retail location needs. Hint: it has nothing to do with the number of desks or shelves.


A square foot failure

Have you ever thought about how much money you should be making? I know this is something we all think about every now and then, but I mean really sit down and think about it. Pen and paper style, hammering it out. What are you worth? What is your time worth? What is your product or service worth? Chances are that very few of you have ever thought about what sales price per square foot you should be achieving.

There is a mathematical markup configuration I could go into and bore you to death and it would ultimately do nothing for you on this subject. Instead, here is something quick you should immediately start paying attention to: Monthly Sales Price per Square Foot.

You can find this number by taking your monthly gross revenue and divide it by the square footage of your place of business. Now keep track of this figure monthly. There are industry averages for each business type and by region that you can find by doing a simple Google search. Now compare the industry average by what you are currently achieving.

What you want to do is make that figure grow either by increasing your sales or decreasing your square footage. Of course this is not the most scientific approach to a sales price per square foot average, but it will get you in the door (or out of) respectively.

Why any of this matters

The real question is WHY is this important? Allow me to be frank here; if you don’t know what sales price per square foot you are averaging in your current location, you will only be guessing when moving from your current location to another location. You can relocate as much as you want, if all you are doing is increasing your overhead to match the needed sales to keep the doors open: you’re still at net zero. Also, if you don’t know when it is time to grow your business and when it’s not, then a Realtor can’t really help you out, because location is just one factor in business success and is not “THE” factor of success.

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