Retail · storefront · franchise · tenant / leasehold study

Retail build-out cost segregation

You built out a leased storefront — fixtures, finishes, signage, lighting. Almost none of that is the landlord's 39-year shell, so most of what you spent accelerates.

Start your study → Typically reclassifies 70–90% of build-out cost

Retail cost segregation analyzes the storefront build-out you funded as the tenant. Retail and franchise build-outs are fixture-and-finish heavy: display systems, trade fixtures, shelving, accent and display lighting, signage, and point-of-sale infrastructure are 5-year personal property. The partitions, fitting rooms, interior HVAC distribution, and finishes are 15-year QIP. As a tenant you carry none of the land or structural shell, so 70–90% of a retail build-out typically reclassifies into accelerated, bonus-eligible depreciation.

Storefront, fixtures, signage, and the cash-wrap define a retail build-out — and almost none of it is the landlord's structural shell. For a multi-unit franchisee, the same component framework repeats at every location.

The basis analyzed is your build-out cost — not a property purchase price (you don't own the building). Ranges below are illustrative engineering estimates as a share of that build-out cost.

Retail display fixtures, shelving and accent track lighting — short-life personal property in a cost segregation study

What reclassifies in a retail & storefront build-out

Component MACRS life Basis share
Trade fixtures, display systems & shelving
Removable merchandising fixtures — the dominant retail bucket
 5-year 10–22%
Accent & display lighting
Brand/display lighting vs. general building illumination
 5-year 3–7%
Storefront, entry & branded millwork
 5 / 7-year 4–10%
Signage (interior & exterior)
 5 / 15-year 1–4%
Checkout / cash-wrap counters
 5 / 7-year 2–5%
POS, security & low-voltage cabling
 5-year 1–4%
Decorative wall & floor finishes
 5 / 15-year 4–9%
Fitting rooms, partitions & ceilings
 15-year QIP 6–14%
Interior HVAC & electrical distribution
 15-year QIP 6–12%

This is the segment-specific view. For the full 5- / 7- / 15-year QIP framework and primary sources, see the tenant-improvement cost segregation overview →

Worked example

Scenario
Specialty retail / franchise storefront build-out
Build-out basis
$400,000
Illustrative reclassification
80% = $320,000 into accelerated MACRS
Estimated year-1 deduction
$320,000 (100% §168(k) bonus on eligible property)
Estimated federal tax savings
$118,000 at 37% marginal
Study fee
$1,495

How the $400,000 build-out splits by MACRS class

Recovery class Reclassified amount % of build-out
5-year personal property$180,00045%
7-year property$28,0007%
15-year QIP & land improvements$112,00028%
39-year (remaining structural)$80,00020%

Illustrative and modeled — year-1 figures depend on build-out scope, §168(k) eligibility, §469 status, entity structure, and your CPA's tax position when the deduction lands. Not a filing figure. Every leasehold order is reviewed by our team before delivery.

Frequently asked

I'm a franchisee opening several locations. Is there portfolio pricing?
Yes — multi-location operators get portfolio pricing, and a standardized franchise build-out means each location's study reuses the same component framework. Tell us how many locations and where they are.
My build-out was under $500K. Is it still worth a study?
Often yes — because 70–90% of a retail build-out reclassifies and most of that is bonus-eligible in year one, even a sub-$500K build-out can produce a year-one deduction many multiples of the $1,495 study fee. We'll model it before you order so the math is in front of you.
Can I combine my fixtures and equipment with the build-out in one study?
Yes — share your fixed-asset register and fixture invoices along with the construction budget. One retail study covers the build-out and the freestanding fixtures you placed in service.

Keep going

Everything you need to scope a retail cost segregation engagement:

Other tenant build-out studies

You paid for the build-out. Get the depreciation you're owed.

Start your study and upload your build-out documents, or send your depreciation schedule and construction budget and we'll talk it through. Every leasehold order is reviewed by our team before delivery.