• Sarah Barker

UNDERSTANDING COMMERCIAL RENTAL RATES

Updated: May 27



Author - Dustin Mortimer


While you've probably figured out how to price your commercial leasing based on property values and other components that affect your cost, there are additional things to take into account as you price your properties. Other factors that determine the effective monthly rent include:

  • Tenant improvement costs

  • Free-rent

  • Abated rent

  • Amortization schedules

Rental rates are also called “Asking Rents” or “Lease Rates.”


Industrial Rental Rates


Industrial properties are quoted differently than Retail and Office. Industrial space is quoted on a per square foot, per month basis. Also, Industrial spaces typically have two components: a portion of the space that is considered “warehouse” and another portion that is “office.” Each portion of the space is calculated at a different rate.


Calculation: (Whse SF * Whse Rate) + (Off SF * Off Rate) = Monthly Rent

Example:

Unit A is 10,000 SF total.

9,000 SF is Warehouse (whse) at $0.45/SF per month: 9000 * 0.45 = $4050/mo

1,000 SF is Office space (off) at $0.90/SF per month: 1000 * 0.90 = $900/mo

10,000 SF Total. The combined rate is called the “Blended Rate”: $4,950/mo


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/m


Dustin Mortimer

TOK | Brokerage Services

direct: 208.881.8348


Want to learn more about buying a franchise? Contact me today.

Sarah@ssbconsulting.us

208.724.1731











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Sarah Barker | SSB Consulting

Franchise Consultant  & Recruiting Specialist

Located in Boise, ID, but I work with clients in all states.

            208.724.1731

           Sarah@SSBconsulting.us

 

 

 

 

 

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