Retail Roomies

Location can make or break a business. But not everyone can find or afford desirable commercial real estate. For some, the answer is bunking up with a fellow entrepreneur.

- Kate Rockwood

JENNY DURANSKI WAS EIGHT months pregnant, on her hands and knees, cleaning up a flood in her eco-friendly nail salon, Noktivo. She’d signed a lease for the Chicago retail spot just nine months earlier, but as her belly grew, so did issues with the shop: Plumbing leaked after every rain, and this latest flood—caused by a burst pipe—would shutter her business for weeks. “It was an old building, and the landlord never fixed anything,” she says. She had to move, but her savings were depleted. When another entrepreneur, Kate Jotzat, offered to let her rent out a room in a hair salon, Chroma K8, Duranski jumped. “I was certain it would be temporary,”she says. “I planned to stay just long enough for me to find a location on my own.”

Instead, Noktivo found a long-term home. For the past year and a half, the two companies have shared one retail space—with separate logos out front plus distinct hours and personnel. Duranski still pays the neighborhood average for commercial retail rent ($50 per square foot), but now it covers utilities, wi-fi, and common cleaning. “I don’t have separate bills to worry about,” she says. “And I’ve maintained the same amount of sales. Because it’s a smaller space, I’m making more—I’ve gone from $100 to $600 [in earnings] per square foot.”

Duranski had stumbled into the entrepreneur’s version of sharing an apartment: coretailing. As the cost of retail spaces continues to rise, particularly in major cities, business owners large and small are increasingly discovering the benefits of sharing: There are financial incentives, of course, but bunking up can also help companies reach new clients and even offer opportunities to collaborate. And there’s no end to the possible combinations.