Q4 Real Estate’s Craig Byers brings you another informational video. This time Craig gives a quick example of how to properly calculate the monthly based rent on commercial real estate.
(Craig) Hey everyone! This is Craig Byers with Q4 Real Estate and I’m here today to answer one of the frequently asked questions that I get from potential customers and clients. That is how to properly calculate the monthly based rent on a piece of commercial real estate. A lot of times commercial real estate is advertised on a per square foot annual basis but the majority of people think about monthly based rent as one figure that they have to pay once a month. I’m going to run through a quick example of how to properly calculate your monthly based rent when it comes to a piece of commercial real estate.
In this example our base rent is $12.95 per square foot (PSF) annually. In addition to the base rent you will probably have something that we refer to as pass throughs. The pass throughs are expenses that the landlord passes through to the tenant. This includes common area maintenance or CAM, property taxes and building insurance. In this example, the pass through expenses are $5.00 PSF. So total rent is $17.95 PSF. Again the base rent of $12.95 plus pass throughs of $5.00 PSF.
In this example our commercial property whether it is retail or office is 3,500 square feet. The annual rent on this example is $62,825 per year. Again we get that from $17.95 PSF times the total occupancy of the entire space which is 3,500 square fee. To get the monthly based rent you take the $62,825 divided by 12 months and in this example our monthly rent is $5,235.
In addition to this rent, a tenant might also have to pay utilities such as water, gas, electric, data, phone and janitorial. This is just a quick example of how to calculate your base rent when you might come across a commercial real estate advertisement for a listed piece of real estate.
If you have any other questions feel free to reach out to me at Q4 Real Estate at 319-294-3339. Thank you very much!
You can watch the informational video, Calculating Commercial Rent with Craig Byers below.
Try out our commercial lease calculator here.
For more helpful information check out our blog post titled: An NNN Lease Versus a Gross Lease: What’s the difference?
Let one of our knowledgeable listing agents partner with you to find a commercial real estate property perfect for your business needs, and assist you in working through the lease process. Contact Jason Rogers or Craig Byers today!