The rent quoted for a retail unit is rarely what you will pay. Shopping centre leases are built from several charges that stack on top of the base rate, and an escalation clause that raises all of them every year. Retailers who budget from the advertised rate per square metre are usually short within months.
Work out the full monthly cost before signing, and read the exit terms as carefully as the rate.
What actually appears on the invoice
Base rent, usually quoted per square metre per month, on the gross lettable area rather than the space you can use.
Operating costs, your share of centre cleaning, security, common area maintenance and management. Rates and taxes, recovered from tenants. Utilities, often with an administration margin added. Marketing levy, a contribution to centre promotion you do not control. And in many centres, turnover rent, an additional percentage of sales above a threshold.
Escalation compounds
Leases carry an annual escalation, applied to rent and usually to operating costs too. Over a five-year term that compounds significantly, so model the final year rather than the first.
A rate that is affordable at signing can be unaffordable by year four if your prices have not moved with it.
Upfront costs before you trade
A deposit or bank guarantee, typically covering several months. Fit-out, which in a shopping centre must usually meet the landlord’s specification and be done by approved contractors. Signage, which is separately approved and charged.
Fit-out is frequently the largest single number and the one most often underestimated, because the centre’s standard is higher than an independent shop’s.
The clauses that matter more than the rate
Whether you can exit early and what it costs. Whether you may sublet or cede the lease if you sell the business. Whether the landlord may relocate you within the centre. Any exclusivity protecting you from a direct competitor opening nearby, or preventing you from opening one.
A long lease on a poor site is harder to escape than most owners expect, and personal surety from the directors is routinely required, which puts your own assets behind the obligation.
Work out the sales you need
Total the full monthly occupancy cost, then calculate what turnover you must achieve at your gross margin to cover it before paying yourself anything.
If the required turnover looks implausible for that location’s foot traffic, the site is wrong regardless of how good the centre is. Registration and compliance details for the trading entity sit with the Companies and Intellectual Property Commission, and landlords verify them.
Frequently asked questions
Is the quoted rent what I will pay?
No. Operating costs, rates recovery, utilities, a marketing levy and often turnover rent are added on top of base rent.
What is turnover rent?
An additional percentage of sales above an agreed threshold, charged in addition to base rent in many shopping centres.
Why does escalation matter so much?
It applies annually to rent and usually operating costs, compounding over the term. Model the final year of the lease, not the first.
What is the largest upfront cost?
Usually fit-out to the landlord’s specification, followed by the deposit or bank guarantee.
Which clause do tenants most often overlook?
Early exit terms, closely followed by whether the lease can be ceded if you sell the business.
Further reading
Originally published in October 2018. Updated September 2026 to set out the full cost structure of a retail lease and the clauses that decide whether you can leave.
