# What will my commercial lease cost?

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.

- Page: https://www.acalculator.org/finance/commercial-lease-calculator
- JSON spec: https://www.acalculator.org/finance/commercial-lease-calculator.json
- Version: cb6e5e0cfe5c

## Default answer

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.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| sqft | Space (square feet) | The square feet you rent, as the lease measures them. |
| rate | Base rent per square foot | The quoted base rent for each square foot, per year or per month as set below. |
| per | Rates are quoted | Whether the rates per square foot are per year or per month. |
| nnn | NNN charges per square foot | Optional: your share of property taxes, insurance and maintenance (CAM), per square foot, same period. |
| esc | Yearly rent increase | Optional: the percent the base rent rises each year of the lease. |
| years | Lease term (years) | How many years the lease runs, from 1 to 50. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| monthly | Monthly rent, year 1 | Base rent + NNN charges per month in the first year. |
| baseMonthly | Base rent per month, year 1 | Base rent per square foot per year × square feet ÷ 12. |
| nnnMonthly | NNN charges per month | NNN per square foot per year × square feet ÷ 12. Shown when you enter NNN charges. |
| annual | Rent for year 1 | Base rent + NNN charges for the first year. |
| lastMonthly | Monthly rent, last year | Base rent + NNN charges per month in the last year of the lease. |
| total | Total over the lease | Every year’s base rent and NNN charges added up. |
| average | Average per month | Total over the lease ÷ (12 × 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.

## Assumptions

- 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

1. sqft = 2,000, rate = $24.00, per = year, nnn = $6.00, esc = 3%, years = 5 gives monthly = $5,000.00, baseMonthly = $4,000.00, nnnMonthly = $1,000.00, annual = $60,000.00, lastMonthly = $5,502.04, total = $314,838.52, average = $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.
2. sqft = 1,500, rate = $2.50, per = month, years = 3 gives monthly = $3,750.00, annual = $45,000.00, total = $135,000.00, lastMonthly = $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.
3. sqft = 3,200, rate = $18.75, per = year, nnn = $4.25, esc = 2.5%, years = 2 gives monthly = $6,133.33, annual = $73,600.00, lastMonthly = $6,258.33, total = $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.

## FAQ

### 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.

## Sources

- 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 of the space; a net lease adds real estate taxes to the base rent, a net-net lease adds insurance too, and a triple net lease passes on all the costs of operating the building; escalation clauses include regular increases in rent, pro-rated increases in taxes and other direct costs, and increases tied to the Consumer Price Index; landlords do not all measure square footage in the same way, and part of the rent pays for public space such as lobbies, hallways and bathrooms. https://sbs-spe.feddevontario.canada.ca/index.php/en/understanding-your-business-lease (retrieved 2026-10-19, read in a browser)