What will my commercial lease cost?
Enter the space in square feet, the base rent per square foot, any triple net (NNN) charges and the yearly rent increase in your lease. The calculator shows how to calculate commercial rent each month and the total over the lease, year by year.
- Monthly rent, year 1
- $5,000.00
The lease costs $5,000.00 a month in the first year and $314,838.52 over 5 years.
- Base rent per month, year 1
- $4,000.00
- NNN charges per month
- $1,000.00
- Rent for year 1
- $60,000.00
- Monthly rent, last year
- $5,502.04
- Total over the lease
- $314,838.52
- Average per month
- $5,247.31
- Years
- 5
Monthly rent, year 1: $5,000.00. The lease costs $5,000.00 a month in the first year and $314,838.52 over 5 years.
What does each year cost?
Year by year
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Computes the monthly and total cost of a commercial lease from the rent per square foot, the area, triple net (NNN) charges and a yearly rent escalation, year by year.
Example with the default inputs (Space (square feet) 2,000, Base rent per square foot $24.00, Rates are quoted Per year, NNN charges per square foot $6.00, Yearly rent increase 3%, Lease term (years) 5): The lease costs $5,000.00 a month in the first year and $314,838.52 over 5 years.
Method: Base rent per square foot per year in year n = base rate × (12 if quoted monthly) × (1 + increase ÷ 100)^(n − 1); base rent = that × square feet; NNN charges = NNN rate × (12 if monthly) × square feet each year; monthly rent = (base rent + NNN) ÷ 12; total = Σ over the years.
- The base rent rises by the same percent each year, compounding, from the first year’s rate; NNN charges stay at the rate you enter.
- Rent is not rounded year to year; the page rounds each amount to the cent for display only.
- Free rent months, tenant improvement allowances, percentage rent and the true-up of NNN estimates are not included.
Worked examples
Each example is checked against the calculator on every build.
- Space (square feet) 2,000, Base rent per square foot $24.00, Rates are quoted Per year, NNN charges per square foot $6.00, Yearly rent increase 3%, Lease term (years) 5 gives Monthly rent, year 1 $5,000.00, Base rent per month, year 1 $4,000.00, NNN charges per month $1,000.00, Rent for year 1 $60,000.00, Monthly rent, last year $5,502.04, Total over the lease $314,838.52, Average per month $5,247.31.Source: Federal Economic Development Agency for Southern Ontario, Small Business Services, "Understanding your business lease" (commercial rents are generally measured by the cost per square foot; net, net-net and triple net leases pass taxes, insurance and operating costs to the tenant; escalation clauses raise rent regularly over the lease). https://sbs-spe.feddevontario.canada.ca/index.php/en/understanding-your-business-lease
- Space (square feet) 1,500, Base rent per square foot $2.50, Rates are quoted Per month, Lease term (years) 3 gives Monthly rent, year 1 $3,750.00, Rent for year 1 $45,000.00, Total over the lease $135,000.00, Monthly rent, last year $3,750.00.Source: Federal Economic Development Agency for Southern Ontario, Small Business Services, "Understanding your business lease" (commercial rents are generally measured by the cost per square foot; net, net-net and triple net leases pass taxes, insurance and operating costs to the tenant; escalation clauses raise rent regularly over the lease). https://sbs-spe.feddevontario.canada.ca/index.php/en/understanding-your-business-lease
- Space (square feet) 3,200, Base rent per square foot $18.75, Rates are quoted Per year, NNN charges per square foot $4.25, Yearly rent increase 2.5%, Lease term (years) 2 gives Monthly rent, year 1 $6,133.33, Rent for year 1 $73,600.00, Monthly rent, last year $6,258.33, Total over the lease $148,700.00.Source: Federal Economic Development Agency for Southern Ontario, Small Business Services, "Understanding your business lease" (commercial rents are generally measured by the cost per square foot; net, net-net and triple net leases pass taxes, insurance and operating costs to the tenant; escalation clauses raise rent regularly over the lease). https://sbs-spe.feddevontario.canada.ca/index.php/en/understanding-your-business-lease
How it works
With A square feet, a base rent of r and NNN charges of c per square foot (per year, or per month when you choose Per month), an increase of e% a year and a lease of Y years. Let m = 12 when the rates are per month and m = 1 when they are per year.
- Base rent per square foot per year in year n = r × m × (1 + e ÷ 100)^(n − 1), for n = 1 to Y
- Base rent for year n = that rate × A
- NNN charges for each year = c × m × A
- Total for year n = base rent + NNN charges, and per month = total ÷ 12
- Monthly rent, year 1 = (r × m × A + c × m × A) ÷ 12; monthly rent, last year is the same for year Y
- Total over the lease = Σ of the yearly totals, and average per month = total ÷ (12 × Y)
Rules:
- The space is from 1 to 1 billion square feet. Rates are $0 or more and at most $1,000,000 a square foot. The increase is from 0% to 100% a year, and the lease a whole number of years from 1 to 50.
- NNN charges and the increase may be left empty (no charges, no increase). NNN charges per month show only when you enter NNN charges.
- The increase compounds on the base rent only; the NNN charges stay at the rate you enter.
- A result that is not 0 but too small to show as a number gives no answer, with the first of these messages that applies: "The monthly rent is too small to show as a number.", "The base rent per month is too small to show as a number.", "The NNN charges per month are too small to show as a number.", "The average per month is too small to show as a number."
- The arithmetic is exact on the decimals you type, with no rounding from year to year. Money shows to the cent (the rate per square foot with 2 to 4 decimals), with halves rounded up (away from 0).
Assumptions
- The rent rises by the same percent every year, starting in the second year.
- Free rent months, tenant improvement allowances, percentage rent and the year-end true-up of NNN estimates are not included.
Worked examples by hand
2,000 square feet at $24 a year, $6 NNN, 3% increases, 5 years. Year 1: base 24 × 2,000 = $48,000, NNN 6 × 2,000 = $12,000, total $60,000, so $5,000 a month ($4,000 base + $1,000 NNN). The base rate rises to $24.72, $25.4616, $26.225448 and $27.01221144. Year 5: 27.01221144 × 2,000 = $54,024.42288 + $12,000 = $66,024.42288, or $5,502.04 a month. Total = 48,000 × (1 + 1.03 + 1.03² + 1.03³ + 1.03⁴) + 5 × 12,000 = $314,838.51888, shown as $314,838.52; average $5,247.31 a month.
A rate quoted per month. 1,500 square feet at $2.50 a month: 2.50 × 12 = $30 a year, 30 × 1,500 = $45,000 a year, $3,750 a month, $135,000 over 3 years.
Two years with cents. 3,200 square feet at $18.75 a year, $4.25 NNN, 2.5% increase. Year 1: (18.75 + 4.25) × 3,200 = $73,600, $6,133.33 a month. Year 2: 18.75 × 1.025 = 19.21875; × 3,200 = $61,500 + $13,600 = $75,100, $6,258.33 a month. Total $148,700.
Other questions people ask
How do I calculate commercial rent?
Multiply the rent per square foot by the square feet. For a rate per year, divide by 12 for the monthly rent: 2,000 square feet at $24 a square foot a year is 24 × 2,000 = $48,000 a year, or $4,000 a month.
What does NNN mean in a lease?
NNN, or triple net, means the tenant pays the base rent plus a share of the property taxes, the insurance and the maintenance of the building. In a gross lease the landlord pays those costs out of the rent.
How do I add NNN charges to the rent?
Add the NNN rate per square foot to the base rate, or work them out apart and add the results. With $6 a square foot a year of NNN charges on 2,000 square feet, the NNN charges are $12,000 a year, or $1,000 a month, so the rent becomes $5,000 a month.
How does a rent escalation work?
An escalation clause raises the rent over the lease. With a fixed 3% a year, the base rent of each year is 1.03 times the year before: $24.00, then $24.72, then $25.46 a square foot. Some leases tie the increase to the Consumer Price Index instead; enter the increase you expect.
What is the rent per square foot per month?
Some listings quote rent per square foot per month. Choose Per month: $2.50 a square foot a month on 1,500 square feet is $3,750 a month, the same as $30 a square foot a year.
What is the total cost of a lease?
Add up every year of base rent and NNN charges. 2,000 square feet at $24 a year with 3% increases and $6 of NNN charges costs $314,838.52 over 5 years, an average of $5,247.31 a month.
Which square feet does the rent use?
The lease's measure, which often includes a share of the building's public space such as lobbies, hallways and washrooms. Landlords do not all measure space the same way, so compare how much usable space you get for the money.