“How Do I Calculate Commercial Rent?”

 

Most tenants think of their rent in terms of a monthly or annual expense.  In the world of commercial real estate, the key metric is cost per square foot (sq. ft.).

In Ottawa, the vast majority of space is leased on a net basis.  These leases will be referred to as ‘Net Leases’, ‘Net/Net Leases’, or ‘Triple Net Leases’.  In a Net Lease, rent is broken down into the Net Rent and the Additional Rent.  The Net Rent is the Landlord’s income, and the Additional Rent is comprised of a tenants proportionate share of utilities, realty taxes, heating, ventilating and air conditioning (HVAC), and contribution to the common area costs (CAM costs).   The Net and Additional Rents are added together to create the Gross Rent per sq. ft.  The Gross rent per sq. ft. is then multiplied by the rentable area to calculate the annual rent.

For example:

($15 net per sq. ft. + $15 Additional rent per. sq. ft.) x 3,000 sq. ft. = $90,000 a year

For further information on rent calculations please contact me directly.