A working brief on laundromat lease costs

What to take away

The five lines that make up occupancy cost

Rent is the visible one. The other four lines are where laundromats get hurt.

Base rent. Asking rates for retail space in most US markets run about $12 to $35 per rentable square foot per year. Strip centers sit at the low end, urban storefronts above $50. Ask for the usable square footage, not the rentable figure, and divide.

Common area maintenance, or CAM. Your share of parking lot sweeping, snow removal, exterior lighting and landscaping. CAM in a strip center typically runs $2 to $6 per square foot per year, and more in a center with structured parking. Ask for the last three years of actual charges, not the estimate.

Triple net charges. Property taxes and the landlord's insurance passed to you. Retail tax bills in many counties land between $1.50 and $4 per square foot per year, and insurance adds about $0.50 to $1.50. Both reset when the county reassesses, and the increase lands on your rent.

Utilities. Water and sewer, gas and electricity. A laundromat's water and gas load is heavy, so confirm who pays and at what meter. Combined water and sewer rates in US cities typically run $6 to $10 per 1,000 gallons. Commercial power averages about 13 cents per kilowatt-hour, according to the U.S. Energy Information Administration.

Buildout and restoration. Who pays to run gas lines, add make-up air and upgrade the electrical service, and who pays to strip it out at exit. A laundromat buildout typically runs $50 to $150 per square foot, with equipment for a 2,500 square foot store adding $150,000 to $300,000. Restoration clauses can leave a $10,000 to $50,000 exit bill.

Run the arithmetic before you tour

Build the model in named variables. Substitute your own figures from the landlord's actuals and your utility quotes.

For the revenue side, a wash and dry turn at posted prices typically brings in $6 to $10. Variable cost per turn, mostly water, gas and electricity, typically runs $1 to $2.50.

Two sites with the same rent can land 30 percent apart on cost per usable square foot. That gap is the decision.

Utility capacity is a lease term

Water service size, gas pressure and available electrical amperage set how many machines you can run. A 2,000 to 3,000 square foot store with 40 to 60 machines typically wants at least 400 amps of three-phase service.

A building that needs a service upgrade is a construction project with a permit timeline you do not control. Upgrades typically run $10,000 to $50,000, and more when the utility has to extend lines to the building.

Ask the landlord for the last twelve months of utility bills at that address. If the space was vacant, ask for the neighboring unit's bills as a proxy.

Machine-room ventilation and dryer exhaust routing belong in the same conversation. Confirm the roof or wall penetration rights in writing. If the work touches gas, electrical or boiler systems, it goes to a licensed technician working to National Fire Protection Association standards.

Accessibility and the space you inherit

The DOJ guide for small businesses covers barrier removal in existing facilities, accessible routes and service practices. It also explains the readily achievable standard, which weighs the cost of the change against your resources.

The guide's examples, such as installing a ramp, widening a doorway or restriping a parking space, are often small jobs rather than a renovation. That analysis is fact-specific. Your attorney and the local building authority apply it to your building.

Where to check the market numbers

The SBA business guide walks through market research, startup costs, permits, insurance and finance. Use it to structure your own underwriting, not to borrow someone else's.

The BLS industry page for drycleaning and laundry services gives establishment counts, employment and earnings for the sector. It tells you what the industry looks like nationally. It does not tell you what the laundromat on your corner will do.

The BLS consumer price index series for water and sewer and trash collection services tracks how fast those municipal rates climb, which matters across a ten year term.

For local demand, pull US Census tract data on renter households and median income from the American Community Survey. Check whether the Coin Laundry Association, the trade group behind PlanetLaundry magazine, publishes a benchmark for your format.

Worked example: two sites, same rent

Site A asks $4,200 a month for 2,400 usable square feet. Site B asks $4,200 for 2,000 usable square feet. On the sticker, they are identical.

Site A's CAM runs $600 a month and the landlord pays water. Site B's CAM runs $400, but the water meter is yours and the building needs a service upgrade you would fund.

Site A lands at $2.00 per usable square foot. Site B lands at $2.30 before the upgrade. Add water for 90 turns a day at roughly 50 gallons a turn: about 135,000 gallons a month, or $800 to $1,350 at typical municipal rates.

That puts Site B near $2.70 to $2.98 per square foot with water included. The margin swing at that volume is roughly $900 a month, which is the number that decides it.

Common questions

What does a laundromat lease cost beyond rent?

Beyond rent you carry CAM, property taxes, landlord's insurance and utilities. CAM adds $2 to $6 per usable square foot per year. Taxes and insurance add another $2 to $5.50.

Buildout runs $50 to $150 per square foot. Restoration at exit is a separate one-time cost. Ask for three years of actual CAM and tax figures, not the estimate.

Should I sign a lease before checking utility capacity?

No. Water service size, gas pressure and electrical amperage determine how many machines you can run. Confirm the capacity and who pays for any upgrade before you commit to a term.

Who should review the lease?

A commercial real estate attorney licensed in the property's state, plus a CPA for the tax and depreciation treatment. This article is general business information, not legal, tax or engineering advice.