Commercial Lease Calculator
Estimate your commercial lease costs, including base rent, operating expenses, annual increases and total lease cost over the term.
Overview
This commercial lease calculator helps you estimate the cost of leasing business space using the size of the premises, annual base rent per square foot, operating expenses, lease term, annual rent increases and any free rent period. It is useful for comparing lease offers and budgeting for occupancy costs.
How it works
The calculator starts with the first year's annual base rent by multiplying square footage by the annual rent per square foot. It then applies the annual increase rate across the lease term to estimate the total base rent, subtracts any free rent concession based on the first year's monthly base rent, and adds operating expenses over the full term. The result is an estimated average monthly cost and total lease cost for the lease period.
How to use this calculator
- 1Enter the total leased square footage.
- 2Add the annual base rent per square foot.
- 3Enter the annual operating expenses per square foot.
- 4Choose the lease term in years.
- 5Add the annual rent increase percentage and any free rent months.
- 6Review the average monthly cost and total lease cost over the term.
Example Calculation
Leased space
2500
Base rent per square foot
$28
Operating expenses per square foot
$8
Lease term
5
Annual rent increase
3%
Free rent period
2
Average monthly cost
$7,666
For a 2,500 sq ft space at $28 per sq ft with $8 per sq ft in operating expenses, a 5-year term, 3% annual increases and 2 free rent months, the estimated average monthly cost is about $8,600 and the total lease cost is about $516,000.
Frequently asked questions
What does this commercial lease calculator estimate?
It estimates the average monthly and total lease cost based on rentable area, base rent, operating expenses, lease term, annual increases and free rent.
Does this calculator include operating expenses?
Yes. It adds operating expenses entered on a per-square-foot annual basis over the full lease term.
How is free rent handled?
The calculator subtracts the value of the free rent period from base rent using the first year's monthly base rent.
Are annual increases applied to operating expenses?
No. This version applies annual increases only to base rent and keeps operating expenses constant unless you change the input.
Can I use this for gross, net or modified gross leases?
Yes, as a rough estimate, but the accuracy depends on how you enter the rent and expense amounts for that lease structure.
Does this include build-out or tenant improvement costs?
No. It does not include fit-out costs, deposits, utilities, parking, legal fees or other separately negotiated charges.
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Assumptions and warnings
Assumptions
- Results are estimates based on a simple commercial lease structure.
- Annual rent increases are applied to base rent only, not operating expenses.
- Free rent is applied at the start of the lease and reduces base rent only.
- Operating expenses are assumed to stay constant each year unless you adjust the input rate.
- The calculator excludes utilities, tenant improvements, parking, legal fees and other separately negotiated costs.
Warnings
- This calculator provides an estimate only and is not legal, financial or leasing advice.
- Commercial lease terms can vary significantly, so review the full lease and speak to a qualified professional before signing.