Commercial Lease Calculator
Estimate occupancy cost as base rent plus tenant-paid operating expenses, then review effective rent per SF, move-in cash, and multi-year escalation impact for one lease structure.
Lease Inputs
Quick Scenarios
Lease structure
Lease Cost Summary
Year 1 occupancy cost
$93,000
2,000 SF - Triple Net (NNN)
Effective rent per SF
$46.50
Tenant-paid operating expenses
$33,000
35.5% of year-one cost
Total lease value
$493,750
Final-year occupancy cost
$104,672
Move-in cash estimate
-$26,750
Security deposit
$15,500
TI allowance
$50,000
Summary
This Triple Net (NNN) scenario lands at $93,000 in year-one occupancy cost, or $46.50 per SF, with taxes, insurance, CAM, and utilities carrying 35.5% of the year-one total.
Tenant-paid operating expenses make up 35.5% of the year-one occupancy cost, and the modeled final-year total reaches $104,672. Comparing base rent alone would understate the true commitment.
Detailed Breakdown
| Metric | Value |
|---|---|
| Square footage | 2,000 SF |
| Lease type | Triple Net (NNN) |
| Base rent per SF | $30.00 / SF |
| Year 1 base rent | $60,000 |
| Property tax | $8,000 |
| Insurance | $3,000 |
| CAM | $16,000 |
| Utilities | $6,000 |
| Year 1 occupancy cost | $93,000 |
| Monthly occupancy cost | $7,750 |
| Operating expense share | 35.5% |
| Security deposit | $15,500 |
| TI allowance | $50,000 |
| Move-in cash estimate | -$26,750 |
| Escalation assumption | 3.0% |
| Final-year cost | $104,672 |
| Total escalation cost | $28,750 |
| Total lease value | $493,750 |
Current Calculation Check
Year 1 occupancy cost
Year 1 occupancy cost = Base rent + Tenant-paid operating expenses
Year 1 occupancy cost = $60,000 + $33,000 = $93,000
Effective rent check
Effective rent per SF = Year 1 occupancy cost / square footage
Effective rent per SF = $93,000 / 2,000 = $46.50 per SF
Move-in cash check
Move-in cash = First month occupancy cost + Security deposit - TI allowance
Move-in cash = $7,750 + $15,500 - $50,000 = -$26,750
Scenario highlights
- Year-one occupancy cost: $93,000.
- Effective rent: $46.50 per SF.
- Move-in cash estimate: -$26,750.
- Tenant-paid operating expenses account for 35.5% of year-one cost.
Year-by-Year Lease Schedule
| Year | Base rent | Operating expenses | Total occupancy cost | Monthly cost | Effective rent / SF | Cumulative total |
|---|---|---|---|---|---|---|
| 1 | $60,000 | $33,000 | $93,000 | $7,750 | $46.50 | $93,000 |
| 2 | $61,800 | $33,990 | $95,790 | $7,983 | $47.90 | $188,790 |
| 3 | $63,654 | $35,010 | $98,664 | $8,222 | $49.33 | $287,454 |
| 4 | $65,564 | $36,060 | $101,624 | $8,469 | $50.81 | $389,077 |
| 5 | $67,531 | $37,142 | $104,672 | $8,723 | $52.34 | $493,750 |
Editorial & Review Information
Reviewed on: 2026-03-18
Published on: 2025-12-04
Author: LumoCalculator Editorial Team
What we checked: Occupancy-cost math, lease-type assumptions, example arithmetic, scope boundaries, and source accessibility.
Purpose and scope: This page supports lease comparison and planning. It is not legal advice and not a substitute for the signed clause that governs expense stops, free rent, TI disbursement, or percentage-rent treatment.
How to use this review: Keep rentable SF, expense assumptions, concessions, and escalation logic consistent across offers before comparing effective rent or move-in cash.
Use Scenarios
Site selection and LOI review
Normalize gross and NNN quotes into the same year-one occupancy cost before choosing which location deserves deeper legal review.
Budget and cash planning
Estimate deposit, TI offset, and escalated occupancy cost before signing a lease that will pressure working capital in later years.
Revenue needed to carry occupancy
Once lease cost is clear, compare it with the Break-Even Calculator to estimate how much gross profit or sales volume the location must support.
Formula Explanation
1) Base rent
Annual base rent = Rentable SF x Base rent per SF
This converts the quoted rental rate into a full-year cost on the rentable-square-foot basis used in the lease.
2) Tenant-paid operating expenses
Operating expenses = Taxes + Insurance + CAM + Utilities
The included line items depend on the lease structure. Gross leases usually leave these with the landlord, modified gross often pushes CAM and utilities to the tenant, and NNN pushes all four categories to the tenant.
3) Effective rent and total occupancy cost
Year 1 occupancy cost = Base rent + Tenant-paid operating expenses
Effective rent per SF = Year 1 occupancy cost / Rentable SF
This is the apples-to-apples comparison view that turns mixed rent and expense structures into one comparable unit cost.
4) Multi-year lease value and move-in cash
Each future year = Prior year x (1 + escalation rate)
Move-in cash = First month occupancy cost + Security deposit - TI allowance
The model uses one escalation rate for both rent and tenant-paid operating expenses, then estimates the front-loaded cash impact from the first month, deposit, and TI offset.
How to Read the Result
Gross lease read
A higher base quote may still be competitive because most operating expenses are already embedded. Focus on what is excluded from the gross structure before comparing it with an NNN offer.
Modified gross read
Shared expense structures often look balanced, but CAM and utilities can still move the effective rate enough to change which suite is really cheaper.
NNN read
A low base rate can hide a large pass-through burden. Watch the operating-expense share, escalation effect, and audit language before treating the location as the lowest-cost option.
Typical NNN Ranges by Property Type
| Property type | Property tax | Insurance | CAM | Total NNN |
|---|---|---|---|---|
| Office | $3-$6/SF | $1-$2/SF | $6-$12/SF | $10-$20/SF |
| Retail | $4-$8/SF | $1-$2/SF | $8-$15/SF | $13-$25/SF |
| Industrial | $1-$3/SF | $0.50-$1/SF | $1-$3/SF | $2.50-$7/SF |
| Medical | $4-$7/SF | $1-$2/SF | $10-$18/SF | $15-$27/SF |
Important Lease Clauses to Negotiate
CAM cap
Limits annual growth in controllable common-area charges.
Base-year stop
Landlord covers expenses up to a stated base-year level and tenant pays increases above it.
Audit rights
Lets the tenant review reconciliations and challenge unsupported expense pass-throughs.
Renewal option
Preserves leverage if the location works and relocation cost would be high.
Exclusive use
Prevents the landlord from placing a direct competitor too close to the same trade area.
HVAC or after-hours language
Clarifies whether extended-hours service is bundled or separately billed.
Example Cases
Case 1: Gross office relocation
Inputs
- Lease type: Full Service Gross
- Square footage: 1,800 SF
- Base rent: $38.00 per SF
- Term: 5 years
- Escalation: 3.0%
Computed Results
- Year 1 occupancy cost: $68,400
- Effective rent: $38.00 per SF
- Total lease value: $363,145
- Move-in cash: -$13,200
Interpretation
The gross quote keeps budgeting simple, but the tenant still needs to decide whether the higher base rate is cheaper than an NNN alternative once pass-through costs are normalized.
Decision Hint
Use the same rentable SF and same concession treatment before comparing this with a lower quoted NNN rate.
Case 2: Retail NNN storefront
Inputs
- Lease type: Triple Net (NNN)
- Square footage: 2,500 SF
- Base rent: $34.00 per SF
- Term: 7 years
- Escalation: 3.0%
Computed Results
- Year 1 occupancy cost: $128,750
- Effective rent: $51.50 per SF
- Total lease value: $986,542
- Move-in cash: -$7,083
Interpretation
The base rent looks manageable, but the real occupancy commitment changes once taxes, insurance, CAM, and utilities are added and escalated.
Decision Hint
Negotiate CAM caps, audit rights, and exclusions before assuming the year-one pass-through estimate will stay stable.
Case 3: Modified-gross medical suite
Inputs
- Lease type: Modified Gross
- Square footage: 3,000 SF
- Base rent: $41.00 per SF
- Term: 7 years
- Escalation: 2.5%
Computed Results
- Year 1 occupancy cost: $163,500
- Effective rent: $54.50 per SF
- Total lease value: $1,234,005
- Move-in cash: -$50,500
Interpretation
Modified gross can look balanced, but CAM and utility assumptions still move the effective rate enough to change the ranking between similar suites.
Decision Hint
Stress-test longer clinic hours, HVAC needs, and shared-area reconciliations before treating this as a fixed-cost structure.
Boundary Conditions
Sources & References
- Q4 Real Estate - Commercial Lease Calculator - Used for occupancy-cost framing, price-per-square-foot quoting context, and NNN terminology.
- Omni Calculator - Commercial Lease Calculator - Used for commercial-rent workflow, lease-type comparison, and worked rent-calculation context.
- Inside NoVA CRE - Rental Rate Calculator - Used for monthly NNN build-up logic from square footage, rental rate, and pass-through expenses.
- Calculator.net - Lease Calculator - Used for broader lease-payment context, lease-versus-rent framing, and multi-period schedule comparison ideas.