How to calculate lease payments for commercial property

Commercial Lease Calculator – Calculate Space Cost

Trying to figure out how to calculate your monthly warehouse, retail or office space rent can sometimes be confusing. Many landlords quote yearly triple net lease rates. Using the commercial occupancy cost calculator from Q4 Real Estate below can help you estimate these costs. If you want to know more about Q4 Real Estate commercial space for lease give us a call.

Commercial Occupancy Cost Calculator - Properties Quoting Yearly Rates

Calculate your space rental (occupancy) costs for properties quoting Yearly Rates (e.g. Retail, Office or Warehouse). For example: Rent could be quoted as a gross rate of $24 per square foot or a Triple Net (NNN) rate of $12 Base + $8 NNN. If estimated pass through expenses are included in the base rate (a gross rate lease) then enter $0 for Total Pass Thrus to calculate your monthly and annual occupancy costs for your commercial lease. 

Why Use the Commercial Occupancy Cost Calculator

This commercial rent (occupancy cost) calculator is a helpful tool for tenants who are leasing commercial real estate. Landlords will quote you lease rates on a price per square foot basis for base rent and pass thrus, usually on a yearly basis. If Tenants are not familiar with the calculation, it can be confusing to understand what the total monthly rent is going to be on the real estate you’re leasing whether it be office buildings, retail spaces, or warehouse space.

When leasing commercial space you may hear a lot of new Lease terms such as cash flow, cap rate, property taxes, gross leases, NNN lease, common area maintenance, etc. If you are not familiar with this terminology then it would be a good idea to hire an experienced agent. The team of professionals at Q4 Real Estate is here to help answer those questions and more.

Commercial leases are calculated on a price per square foot because most commercial rental properties can be divided or made into one larger space. The property owner or it’s real estate professionals can’t tell you what your total monthly lease payments will be however, until the size of the space is determined.

Understanding How Landlords Quote Rates

Most lease contracts will be triple net leases (NNN), meaning the business tenant must pay a base rate + NNN (taxes, insurance, common area maintenance). Landlords quote lease rates differently depending on the type of real estate investment, state/city located, or just their preference. In most cases retail space such as retail and office space will be quoted as yearly rates (e.g. $35 + $10nnn).

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How to calculate lease payments for commercial property
Depending on the city you are in and type of commercial lease (e.g. retail, office, warehouse, etc) commercial leases use various price per square foot pricing methods. The type of commercial lease calculation method you use is also often related to the type of business you have. Below are a few examples on how to calculate price per square foot in commercial leases. If you want to know more about commercial real estate Austin price per square foot feel free to contact us.

Calculating Price Per Square Foot in a Commercial Lease

Let's say rent is $xx.xx per square foot for the commercial rental space. You will typically see this quoted as an annual rate or a monthly rate.

  • Example with a yearly price per square foot: A 3,000 sf office space has a yearly asking rental rate of $25 per square foot. 3,000 x $25.00 = $75,000 per year for rent. Divide by 12 months to get a monthly rental amount of $6,250.
  • Example with a monthly price per square foot: 3,000 sf retail space has a monthly asking rental rate of $2.083 per square foot. 3,000 x $2.083 = $6,250 per month for rent. Multiply by 12 months and you get a yearly rental amount of $75,000.

As you can see the yearly rate of $25 per square foot is the same as the monthly rate of $2.083 per square foot. When negotiating commercial leases it's important to know the difference between the two so you calculate your rent correctly when comparing alternative properties.

Also keep in mind that in most cases, in addition to the base rent you will also be responsible for paying your share of the operating expenses, which are also known as the Triple Nets or NNN. The NN are estimated at the beginning of each year and each tenant pays exactly the same NNN per square foot as those are not negotiable.

Commercial Rent Calculator

If you have any questions about how to calculate price per square foot in commercial leases don't hesitate to contact us. We also have a handy commercial rent calculator that will estimate your total monthly and yearly rental amount.

How do you calculate commercial?

It is calculated based on a simple equation of rentable square footage multiplied by each unit of usable square feet available. For instance, if the price per square foot is $10 and the total square footage of the unit is 1000 square feet then the gross rent would be $10 x 1000 = $10,000.

What is the commercial rent increase for 2022 Ontario?

In 2022, the maximum most landlords can raise a tenant's rent 1.2% (rent control). Generally, a tenant's rent can only be increased once every 12 months, and the landlord must give the tenant written notice of a rent increase at least 90 days before it takes effect.

How do you calculate commercial rent per square foot UK?

How to Calculate Commercial Rent:.
Take Your Price Per Square Foot..
Multiply That by Your Total Square Footage..
That Gives You Your Total Annual Rent..
Divide by Twelve for Monthly Rent..