One of the main decision making factors that determine which office space businesses choose to rent is cost. However, we often get asked the question, “How do I calculate the monthly cost of renting office space for lease?” While the calculation is simple, it can be confusing sometimes as some landlords tend to quote rental rates differently than others.
For example one landlord may quote $26 SF gross and another may quote a base rate of $14 SF + $12 NNN. At the end of the day all you care about is what your total monthly business space rental costs are. While there are a lot of other factors to consider below will give you the down and dirty on how to calculate the monthly office space rental cost for your business.
Calculating your monthly office lease amount involves 3 things:1. The size (in square feet) of the office space you are about to lease (e.g. 2,400 SF)2. The landlord’s asking lease rate. Could be quoted as a gross lease (e.g. $26 SF) or a NNN lease (e.g. $14 SF+ $12 NNN SF). More about NNN (aka operating expenses later).3. The number 12 (number of months in one year)
Below are a couple of examples on how to calculate the monthly cost of renting office space for lease.
Office Example #1 – Gross Rental Rate Square footage of Office Property = 2,400 SF Quoted Gross Rental Rate = $26 SF/Yr Estimated operating expenses = already included in gross rental rate Total asking lease rate = $26 SF/Yr Yearly Rent = 2,400 x $26 = $62,400 Monthly Rent = $62,400 / 12 = $5,200 per month
Office Example #2 – Base Rate + NNN (operating expenses) Square footage of Office Property = 2,400 SF Quoted Base Rental Rate = $14 SF/Yr Estimated operating expenses (NNN) = $12 SF/Yr Total asking lease rate = $26 SF/Yr Yearly Rent = 2,400 x $26 = $62,400 Monthly Rent = $62,400 / 12 = $5,200 per month
To get more help check out one of our past blogs that shared a few tools to help calculate office space needs and lease costs. If you need additional help with your commercial property lease needs feel free to give us a call.