Average Cost Of Rent For A Small Business

When it comes to the rental cost for your small business, you will want to be very careful and plan accordingly. While there are guidelines, it is wise to spend no more than two percent of the revenue generated by your company. This figure varies depending on your industry and location. Taking the time to study your financial records, particularly from the previous year, and the expected revenue from your business will help you determine the right rent cost for your business. Moreover, it is also important to analyse the space that you plan to rent before making any final decisions.

Average Cost Of Rent For A Small Business

Average Cost Of Rent For A Small Business

Office Rental Costs

When you start a small business, one of the major expenses will be office rent cost. You may rent a physical location or opt for a virtual office space. You can pay a monthly fee for the space or negotiate a custom deal. The total amount to pay for office space may also depend on the number of employees you have and the amenities offered by the landlord. 

Additional costs you may incur will be based on the type of lease you sign with the landlord. Some landlords require a one-year lease, while others are more flexible. Typically, businesses should expect to pay between one and five years for their office space.

The cost of office space will vary greatly, based on the location and amenities. The rent for storefronts in Manhattan in areas like SoHo, Chelsea, or the Garment District is around $3,000 a month. 

The cost of office space will also vary according to location and type. Larger office spaces offer higher privacy and amenities, but may not be necessary for a small business. You should calculate your space needs per employee, along with the area in which you want to locate it. To estimate your budget, start by determining the unit economics of your business. 

Moreover, you have to take into consideration the security of the office space. Does the space have dedicated or shared parking? Does the space have a security system? If so, do you want to provide the best security possible? 

Office Rental Costs in a Big City

Office rental costs in a big city for a small business can range widely. In the city of New York, for example, the average rent for a single square foot of traditional office space is between $75 and $84 whereas in Atlanta, the average cost for retail space for lease is about $19.10 per square foot. Rent in a high-traffic city such as Boston can reach $6,080 per employee annually on an average. In addition to paying for office space, tenants are also responsible for paying for utilities, which may cost up to 30% of the total amount of the lease. Electricity alone, for a small business, can cost up to $684 per month. 

City Per square foot
  • New York, New York State $54.6 
  • Los Angeles, California $3.61 
  • Chicago, Illinois $37.56
  • Houston, Texas $31.00 
  • Phoenix, Arizona $27.55
  • Philadelphia, Pennsylvania $26.00 – $40.00 
  • San Antonio, Texas $26.50
  • San Diego, California $42.06
  • Dallas, Texas $30.36
  • San Jose, California $49.98

Office Rental costs in a Low-traffic Area

The office rental costs for a small business in a low-traffic location are typically lower than those in a higher-traffic area. The amount you pay for the office space can be affected by many factors, including the location, parking, and security. While long-term leases can save you money in the short term, they can quickly add up to thousands of dollars over time. To ensure that your business gets the most bang for its buck, it’s vital to establish a budget before you look at different offers. In a low-traffic area such as Dayton, the average office rent was $15.59 per square foot in 2020, according to CommercialCafe. The average office rent in Akron was $17.90 per square foot in 2020.

City Per square foot
  • Berkeley, SpringsWest Virginia $14.19
  • Watch Hill, Rhode Island $15.00
  • Whiteville, North Carolina $19.32
  • Elkins, Arkansas $14.12
  • Joshua Tree, California $23.50
  • Brisbee, Arizona $12
  • Hood River, Oregon $15.00
  • Akhiok, Alaska $29.90
  • Caliente, New Mexico $15.00
  • Whites City, Nevada $13.20


The goal is to have a good balance between price and amenities. In a low-traffic area, the rent can be lower, but a high-traffic area can attract more business. In addition to high-traffic areas, businesses that thrive in these locations are less likely to move. High-traffic areas also tend to attract more successful tenants, which can mean years of dependable rent and positive cash flow for the landlord. As for a small business owner, you must do some research on the location you want to lease space and get in touch with the right broker to help you in the process. Remember to negotiate the best terms to acquire the best possible lease for your business.

Average Cost Of Rent For A Small Business

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