how do you calculate your office rent if they tell you the lease rate?

Question

how do you calculate your office rent if they tell you the lease rate?
I am looking for office space for a new company. I have seen lease rates varying from $5 to $25. How do I calculate my monthly lease payment based on these numbers? IThe first 3 answers on my last question were not correct. I think I take the lease rate times the square footage and divide by 12 (for the months of the lease)

Answer 1

You are absolutely correct (and I was worn with your last answer)!! You do factor 12 months into the equation.

Office and Retail Rental Rates:

Rates for Office and Retail space are quoted on a per square foot/per year basis.

Calculation: (SF * Rate)/12 months = Monthly Rent

Example:

Unit A is 2,000 SF at $15.00/SF per year: (2000 * 15)/12 = $2,500/mo

Answer 2

Yes that is correct. You take your rate times the square footage. That will give you the annual rent. Divide that by 12 and you will get your monthly rent. However that is not all. There are many kinds of office leases. The rates itself does not tell the whole story. In most basic terms, there is the "Gross Lease", and there is the "Triple Net Lease".

If you have a Gross Lease, it means that the rate quoted to you is an all inclusive rate. You pay a set amount of rent every month and the landlord is responsible for all other expenses such as electricity, taxes, insurance, maintenance, repairs and everything under the sun. In this type of leases, the rates tend to be higher. However, it eliminates the need to deal with all the other expenses and the risk is passed on to the landlord. For example, if insurance and taxes goes sky high, the landlord takes a hit. Not you.

With the net lease, the landlord quotes you a lower price but your are responsible for everything. The triple net lease means rent plus your pro-rather share of property taxes, insurance and maintenance (such as utilities, cooling and heating, repairs, janitorial, landscaping etc). You as the tenant takes the risk if expenses get out of control. So please verify what kind of lease you are getting into before you can truley compare which property is a better deal. Hope this helps.

Answer 3

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It means $5 - $25 per Sq. Ft. of office space.

Answer 4

Hope this helps!