The rental price of a retail space varies greatly by street because foot traffic, location type, and visibility directly determine how much revenue a retailer can generate at that spot. A retail space in the busiest A1 location in a major city can cost ten times as much per square metre as a comparable space in a B location in the same municipality. The greater the appeal of the location to consumers, the higher the rental price owners can charge. The questions below give you a clear picture of all the factors that determine that price, and how you as an entrepreneur can tell when a rental price is in line with the market.
What factors determine the rental price of a retail space?
The rental price per m² of a retail space is determined by a combination of foot traffic intensity, location class, floor area, visibility, and the type of shopping area. The most important factor is the expected turnover a retailer can achieve at that location. The more consumers pass by daily, the more an owner can charge.
In addition to footfall numbers, the following factors play a concrete role:
- Location class: A1, A2, or B determines the base price for a street or zone
- Floor area and layout: smaller units often have a higher price per m² than large units
- Visibility and accessibility: corner properties, properties near car parks or public transport hubs are worth more
- Type of shopping area: inner-city shopping street, covered shopping centre, or retail park each have their own price level
- Supply and demand: in cities with few available A locations, scarcity drives up the price
Furthermore, the condition of the property matters. A move-in-ready space with modern installations justifies a higher rental price than a shell unit that the tenant must fully fit out themselves. Service costs, which are charged on top of the base rent, increase the total rental burden further. It is therefore essential to look not only at the base rental price per m², but at the total occupancy costs of a location.
What is the difference between an A1, A2, and B location?
An A1 location is the busiest part of a shopping area with the highest footfall, an A2 location is directly adjacent to that core area but attracts fewer visitors, and a B location is situated outside the primary shopping circuit. This distinction is decisive for both the rental price and the type of retail formula that can be successful at a location.
At an A1 location in a major city such as Amsterdam, Utrecht, or Rotterdam, tens of thousands of consumers pass through daily. Large international brands are willing to pay premium rental prices because the visibility and volume justify the rental burden. An A2 location attracts fewer casual passers-by but is attractive for retail formulas that are less dependent on impulse visits, such as specialist shops or service providers. B locations are suitable for concepts with a strong destination function or a loyal regular customer base, but are unsuitable for retailers that depend on spontaneous walk-in customers.
The difference in rental price between an A1 and a B location in the same city can amount to a factor of five or more. This makes the choice of location one of the most decisive financial decisions for a retail entrepreneur. Guidance on location selection by a specialist retail agent helps to make that assessment based on current market data, not on gut feeling.
How much rental price per m² is normal for a retail space?
There is no universally normal rate for the rental price per m² of a retail space. The bandwidth in the Netherlands ranges from a few tens of euros per m² per year at B locations in medium-sized cities to more than a thousand euros per m² per year at prime locations in Amsterdam. The right reference always depends on city, street, and location type.
To give an indication of the variation:
- A1 locations in Amsterdam, Utrecht, and Rotterdam: prices can be very high for small units at prime locations
- A1 locations in medium-sized cities such as Groningen, Eindhoven, or The Hague: significantly lower, but still substantial for small units
- A2 locations: typically 40 to 60 percent of the A1 price in the same city
- B locations: can be considerably lower than A2 locations
What is considered normal also changes over time. The Dutch retail market has undergone structural shifts in recent years due to the rise of online retail and changing shopping behaviour. KroesePaternotte holds lease contract data going back to 1984, making it possible to assess whether a requested rental price is in line with recent transactions on that same street. That is precisely the information an entrepreneur needs to negotiate from a position of strength.
Why do well-known brands sometimes pay more rent than small retailers?
Well-known brands sometimes pay higher rental prices because a prime location also serves as a marketing instrument for them. A store at an A1 location increases brand visibility, strengthens the image, and generates indirect revenue through online channels. For a large brand, the rental price is therefore not only a cost item, but also an investment in brand positioning.
In addition, large brands structurally achieve higher turnover per square metre through economies of scale, strong marketing budgets, and a well-known name that attracts passers-by. Owners of prime locations know this and accordingly charge higher rental prices for formulas with proven revenue potential.
For a starting or growing retail entrepreneur, this means that directly comparing with the rental price paid by an established brand can be misleading. A smaller formula has a different revenue structure and cannot always bear the same rental burden. Determining a maximum acceptable rental price based on a realistic turnover scenario is therefore an essential part of the location assessment. View the current retail listings to get a feel for what is available on the market and at what price levels.
How do you negotiate a market-conform rental price?
Negotiating effectively for a market-conform rental price starts with insight into recent transactions on the same street or in the same shopping area. Knowing what comparable units have achieved over the past twelve months puts you in a stronger position at the negotiating table than relying solely on the asking price.
Concrete steps to negotiate well-prepared:
- Gather reference transactions: ask about rental prices of comparable units in the area that have recently been let
- Calculate your maximum rental burden: use a realistic turnover forecast and determine what percentage of that is affordable as rent
- Do not negotiate on rental price alone: rent-free periods, contributions to fit-out costs, and break options are also negotiable
- Do not be pressured by time constraints: a landlord claiming there are multiple interested parties does not necessarily mean that is the case
- Engage a specialist: a specialist retail agent negotiates based on current market data and knows the room for manoeuvre
KroesePaternotte negotiates on behalf of tenants based on a database covering the entire Dutch retail market. That provides a concrete advantage: not negotiating on gut feeling, but based on what comparable spaces actually achieve. Get in touch to discuss what that can mean for your location search.
When is a rental price too high for your retail concept?
A rental price is too high when the expected turnover at that location is insufficient to cover the total rental burden while still maintaining a healthy margin. As a rule of thumb, rental costs for most retail concepts should not exceed 10 to 15 percent of turnover, but this varies by sector and by margin.
Signs that a rental price does not suit your concept:
- The break-even turnover you need to cover the rent is structurally above what is realistically achievable at that location
- The rental price per m² is significantly above recent transactions on the same street without the unit being demonstrably better
- The total occupancy costs including service costs, VAT, and any marketing contributions to a shopping centre exceed your budget before your first customer walks through the door
- The lease term offers insufficient flexibility if the concept underperforms
The risk of an excessively high rental price is not only financial. A retailer that structurally pays too much rent has less budget for marketing, staff, and assortment, which further reduces the chances of success. The location must be able to earn the rental price. If that does not add up arithmetically, it is better to take a step back to an A2 location or a different city where the ratio between rental price and turnover potential is more favourable.
KroesePaternotte helps retailers assess that ratio based on current market data and years of experience in the Dutch retail market. Whether you are opening your first store or expanding to a new city: the right location at the right price starts with the right information.
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