How to Calculate the Monthly Cost of Renting Commercial Property for Lease

how to calculate monthly cost commercial property leaseWhen trying to determine which commercial property you want to lease one of the main determining factors is monthly cost, however many do not understand how to calculate monthly rent.

Calculating your monthly lease amount involves 3 things: 1. The square footage of the space you are about to lease (e.g. 2,000 SF) 2. The landlord’s quoted rental rate (e.g. $20 SF) 3. The number 12 (number of months in one year)

It’s common for landlords to quote commercial property for lease differently. One may quote $22 sf, the other may quote $12 + $10nnn. At the end of the day they are both quoting the same total lease rate. There are other things to consider however we will save that lesson for another time.

Below are a few examples on how to calculate the monthly cost of renting commercial property for rent.

Example #1 You are thinking of leasing 2,000 SF. The landlord is quoting $20 SF lease rate. Lease term is 12 months. Monthly Rent = 2,000 x $20 / 12 = $3,333 per month

Example #2 You are thinking of leasing 1,500 SF. The landlord is quoting a rental rate of $19.50 SF. Monthly Rent = 1,500 x $19.50 / 12 = $2,437.50 per month

Example #3 You are thinking of leasing 2,300 SF. The landlord is quoting a $27 lease rate. Monthly Rent = 2,300 SF x $27 / 12 = $5,175 per month

Whether you need office space for rent or another type of commercial real estate the calculations are similar. You can also try using our handy commercial property rent calculator.

Photo Credit: businessinsider.com

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About Nathan Smith

Nathan Smith

About Nathan K Smith is an Austin commercial real estate advisor that specializes in helping companies and business owners find the best deals on Austin office, retail, and other commercial real estate properties. Connect with Nathan on Google+ View all posts by Nathan Smith →