Salon suites offer an appealing opportunity for entrepreneurs to own and rent out individual suites to beauty professionals. This comprehensive guide covers planning a salon suite business, startup costs, design considerations, attracting stylists, legal structures, marketing strategies, office management, maximizing profitability, and industry trends.
(Disclaimer: This article is for informational purposes only and does not constitute business, legal, or financial advice. Please conduct your own research before starting any business.)
Table of Contents
What is a Salon Suite Business?
A salon suite facility contains multiple private rental suites outfitted for beauty professionals to perform their services like hair, nails, lashes, facials, massage, and more. Salon owners benefit from furnished ready-to-use spaces while suite owners earn rental income without the hassles of managing a full-scale salon.
Why Start a Salon Suite Business?
Benefits of the salon suite rental model include:
- Provides essential space for independent beauty pros
- Generates reliable recurring rental revenue
- Scales easily by adding additional suites
- Lower overhead than traditional salon
- Professionally managed shared resources
- Recession resilient demand
- Rental deposits minimize risk
- Custom build-out depreciation benefits
- Ideal passive investment holding retail real estate
For investors or owner-operators, salon suites provide solid returns with minimal responsibilities compared to other commercial properties.
How to Start a Salon Suite Rental Business
Major steps to launch a salon suite business include:
- Researching local market demand and pricing
- Finding an appropriate commercial retail space
- Working with architect on layout and design
- Obtaining construction permits and financing
- Overseeing buildout of suites and common spaces
- Installing furnishings, equipment, signage
- Implementing online booking and bill pay
- Leasing suites to target mix of beauty professionals
- Setting competitive but profitable rental rates
- Hiring community manager to support tenants
- Promoting vacancies through marketing outreach
- Providing excellent service to tenants
Proper planning and capitalization are crucial when starting any new real estate venture.
Typical Salon Suite Layout and Design
Salon suites typically contain:
- Individual suites sized from 100 to 600 sq ft
- Stylist-friendly ventilation, lighting, flooring
- Shared shampooing and facial areas
- Customer reception and waiting lounge
- Bathrooms
- Laundry room with industrial equipment
- Janitorial and storage closets
- Staff kitchen and breakroom
- Natural light for certain services
Consider layout intricacies required by each tenant type during design.
Estimated Salon Suite Construction Costs
Typical costs to build out a salon suite facility include:
- Architect fees – $5,000 to $20,000
- Permits – $2,000 to $5,000
- Demolition – $3,000 to $10,000
- Plumbing – $10,000 to $30,000
- Electrical – $15,000 to $40,000
- HVAC – $10,000 to $30,000
- Construction labor – $100,000 to $300,000
- Materials and finishes – $50,000 to $150,000
- Furnishings – $30,000 to $80,000
- Contingency buffer – 10%+
Expect $200,000 to $500,000+ for a 5,000 sq ft buildout. New construction further raises costs.
How to Fund and Finance Construction
Financing options for funding the project include:
- Small Business Administration (SBA) loans
- Conventional commercial real estate loans
- Personal equity and investments
- Private lending
- Crowdfunding real estate platforms
- Investor partnerships and syndication
- Small business term loans
- Credit cards or business lines of credit
Mix debt judiciously with adequate equity to ensure favorable lending terms.
What Amenities Should Suites Offer?
Ideal amenities to include for tenants:
- Modern furnishings – salon chairs, shampoo bowls, esthetician beds
- Reception desks, shelving, storage cabinets
- Towel warmers, magnifying lamps
- Televisions – surround sound optional
- Soothing background music selections
- Mini-fridges, microwave, coffeemakers
- Sinks with hot water and good drainage
- Laundry machines – washers, dryers, steamers
- Disposal bins for hair, nails, cotton rounds, etc.
Thoughtfully outfitting suites makes them more appealing and functional for tenants.
What Should Salon Suite Rental Rates Be?
When pricing suites, factors like:
- Location – High foot traffic and income areas support premium rates
- Condition – Newer spaces command greater rents
- Size – Price per square foot declines for larger spaces
- Demand – Balance vacancies with maximizing revenue
- Included amenities – Access to shampoo bowls, laundry, reception
- Term length – Offer discounts for longer leases
- Competitor pricing – Align with prevailing market rents
Optimizing rental income involves actively managing pricing over time.
How to Market Your Salon Suites
Effective marketing tactics to lease space include:
- Listings on commercial real estate platforms
- Direct outreach to local stylists and shops
- Search ads for related keywords like “salon space for rent”
- Social media ads targeted locally
- Attending beauty industry trade shows and events
- Emailing cosmetology schools and graduating students
- Grand opening events and networking once operational
- Ongoing social media showcasing available spaces
- Optimized online presence and positive reviews
Promote continuously through diverse channels to maintain awareness and fill vacancies.
Estimating Salon Suite Revenue Potential
A typical 5,000 sq ft salon suite facility with:
- 15 suites averaging 400 sq ft
- Blended rental rate of $28/sq ft
Can generate around:
- $168,000 in annual rental revenue
After expenses, net profits can reach $100,000+ annually.
Larger facilities with more suites produce higher incomes for investors.
Tips for Managing and Overseeing Suites
Best practices for optimizing operations include:
- Maintain regular communications and gather input from tenants
- Keep noise transfer between suites to a minimum
- Quickly address any maintenance or repair issues
- Treat plumbing carefully to prevent clogs and issues
- Arrange pest control to prevent bugs or rodents
- Schedule thorough regular common area cleanings
- Set clear usage rules and expectations upfront
- Mediate any conflicts or disputes promptly and impartially
Proactive oversight ensures suites remain desirable and functional.
Common Salon Suite Ownership Structures
Sole Proprietor – Simplest structure but higher legal liability
Corporation – More complex but provides liability protections
LLC – Hybrid offering personal liability shield with pass-through taxation
Partnership – For joint ventures splitting ownership
Evaluate each structure based on your tax situation, risks, and financing preferences.
Salon Suite Ownership Challenges
Hurdles suite owners often encounter:
- Initial financing and construction delays
- Achieving target occupancy rates
- Ongoing maintenance and plumbing issues
- Staffing challenges – community managers, janitorial
- Licensing requirements in some areas
- Managing mix of tenants and suite usage
- Revenue declines during recessions
- Ensuring safe conditions and monitoring risks
Proper planning, budgeting, and reactive management prevents major headaches.
Salon Suite Industry Trends and Outlook
Current developments impacting salon suites:
- Ongoing shifts from traditional salons to open flexible spaces
- New niche services gaining popularity – lashes, waxing, piercings
- Higher buildout costs and retail lease rates
- Staffing challenges finding qualified community managers
- Technology integration – online booking, bill pay, remote access
- Demand for enhanced suite amenities among tenants
- Continued flexibility and mobility preferences
Focus on tenant experience, differentiation, and community to thrive despite challenges.
Conclusion
The salon suite ownership model allows entrepreneurs to capitalize on the growing demand among beauty professionals for quality furnished spaces paired with flexible independent operations. With proper underwriting, development, and tenant screening, suites can become cash-flowing assets producing attractive risk-adjusted returns. Just be sure to manage judiciously, reinvest sufficiently, and keep spaces optimized to remain leased. Use this guide as your industry primer when exploring investing in a salon suite venture.
Frequently Asked Questions
How much does it cost to start a salon suite business?
Plan $200,000 to $500,000+ to account for startup costs like construction, permits, furnishings, marketing expenses, insurance, legal fees, initial working capital outlays, and reserve funds through lease up periods before stabilized occupancy is reached.
How profitable are salon suites?
Established salon suites can generate annual net profits of $100,000+ on average for smaller 5,000 sq ft facilities. Profitability expands proportionally with more suites and higher rental incomes from larger facilities. Profit margins typically range 25-35% of revenue.
How much rent should I charge per suite?
Average salon suite rental rates range $200 – $500+ per month per 100 square feet. This translates to $800 – $2,000+ monthly for a 400 sq ft suite. Rates should be competitively aligned with local market conditions.
What is included in a salon suite?
Typical salon suite amenities include furnishings like chairs and shampoo bowls, reception desks, sinks, magnifying lamps, wall mounted TVs, towel warmers, breakroom access, and janitorial maintenance of common areas. Utilities like WiFi are also usually included.
How large should a salon suite be?
Standard salon suites range from 150 to 600+ square feet. Ideal size depends on the type of services, equipment needs, storage requirements, and number of chairs to accommodate clients. Most stylists target 300 to 400 sq ft.
How do you rent out a salon suite?
Strategies to lease salon space include advertising vacant suites online, social media campaigns showcasing available spaces, attending trade shows, emailing cosmetology schools, optimizing SEO to rank for related searches, promotions at suite grand openings, and word-of-mouth networking.
Do you need a license to open a salon suite?
Requirements vary regionally. Some states and municipalities require special salon suite facility licenses. Many also mandate owners carry general business licenses. Check local regulations carefully before launching.
How much should I rent a salon suite for?
When evaluating potential salon suites, expect rents around $200 – $500+ per month per 100 square feet of space in most markets. Rates vary based on location, amenities, and local demand.
How much space do you need per stylist?
Plan for 150 – 250 square feet of space per stylist. This provides room for 1-2 stylist chairs, shampoo area, reception, storage cabinets, and circulation. More space may be required for luxury suites allowing 3+ chairs.
How much do salon suites make per month?
The average salon suite facility generates around $25,000 to $60,000+ in monthly rental revenue. This depends on size, number of suites, location, and average monthly rental rates per suite. Higher densities in strong markets produce greater incomes.
