Commercial Lease Calculator
Enter your lease terms to see your true monthly and annual cost, including base rent, triple-net (NNN) operating expenses, annual rent escalations, free rent concessions, and broker commissions. Switch between lease types from gross to triple-net, get a year-by-year payment schedule, and see exactly how each cost component adds up.
How commercial rent is quoted
Commercial space is almost always priced on a per-square-foot-per-year basis in the United States (per-square-metre-per-year in metric markets). A 2,500 ft² suite at $25/ft²/year costs $62,500/year, or $5,208/month in base rent before any operating expenses. When comparing spaces, always verify whether the quoted rate is a gross rate (all-in) or a net rate (base only, with operating costs added separately), because the difference can be substantial.
Understanding triple net (NNN) leases
A triple net lease is the most common structure for freestanding retail, industrial, and many office properties. In addition to base rent, the tenant pays three categories of operating expenses: property taxes, building insurance premiums, and common area maintenance (CAM) charges. These are typically expressed as a dollar amount per square foot per year. A space at $25/ft²/yr base with $8.50/ft²/yr in NNN expenses has a true annual cost of $33.50/ft²/yr. NNN figures are usually estimates at the start of the lease and are reconciled at year-end against actual landlord expenditure, so ask for a recent expense history before signing.
Annual escalations and total lease cost
Most commercial leases include annual rent escalations, typically 2-4% per year or tied to the Consumer Price Index. A 3% annual bump on a 5-year lease increases your monthly payment by about 15.9% by year 5 compared to year 1. Over the full term, escalations meaningfully raise total cost: a $5,000/month lease at 3%/year costs about $323,000 over 5 years, not the flat $300,000 you might expect. This calculator applies the escalation to base rent in each year and shows you the full schedule.
Tenant concessions: free rent and tenant improvement allowance
Landlords frequently offer concessions to attract tenants, especially in softer markets. Free rent is a period at the start of the lease (often 1 to 6 months) where no base rent is charged; NNN expenses typically still apply during this period. A tenant improvement allowance (TIA) is a cash contribution from the landlord toward fit-out and renovation costs - common figures range from $20 to $80 or more per square foot depending on market conditions. Both reduce your effective cost below the face-rent figure, and this calculator shows you the net effective cost after subtracting the TIA.
Commercial lease types at a glance
| Lease type | Base rent | Property taxes | Insurance | Maintenance/CAM |
|---|---|---|---|---|
| Gross | Tenant | Landlord | Landlord | Landlord |
| Modified Gross | Tenant | Shared | Shared | Shared |
| Single Net | Tenant | Tenant | Landlord | Landlord |
| Double Net | Tenant | Tenant | Tenant | Landlord |
| Triple Net (NNN) | Tenant | Tenant | Tenant | Tenant |
Which operating costs the tenant pays in each common lease structure. NNN = triple net.
Frequently asked questions
What is the difference between a gross lease and a triple net lease?
In a gross lease, you pay a single rent amount and the landlord covers property taxes, insurance, and maintenance out of that amount. In a triple net (NNN) lease, you pay base rent plus those three operating costs separately. NNN leases typically have lower quoted base rents but a higher all-in cost. A modified gross lease sits between the two, with specific costs negotiated case by case.
What is CAM, and is it negotiable?
CAM stands for Common Area Maintenance - the costs of keeping shared areas of the property (parking lots, lobbies, landscaping) in good repair. It is quoted per square foot per year and is often negotiable. You can ask for a CAM cap (limiting annual increases to, say, 5%), an exclusion list (removing capital expenditures or management fees), or an audit right to verify the landlord's actual costs.
How do annual rent escalations work?
A fixed annual escalation (e.g. 3%) means your base rent increases by that percentage on each lease anniversary. Starting at $5,000/month, a 3% annual escalation produces $5,150 in year 2, $5,305 in year 3, and so on. Some leases tie escalations to the Consumer Price Index instead of a fixed percentage. Either way, escalations compound, so the total lease cost is significantly higher than year-1 rent multiplied by the term.
What is a tenant improvement allowance, and how is it paid?
A tenant improvement allowance (TIA) is money the landlord gives you to build out or renovate the space. It is usually paid as reimbursement: you hire contractors, pay the invoices, and the landlord reimburses up to the agreed amount after review. The allowance reduces your net effective lease cost but is not always cash-in-hand on day one.
What does effective monthly rent mean?
Effective monthly rent is the net economic cost of the lease spread evenly over the full term. It accounts for any free rent periods (where base rent is waived) and subtracts the tenant improvement allowance from the total lease value. It is a useful single number for comparing two lease options with different concession packages.
Who pays the broker commission on a commercial lease?
In most U.S. commercial transactions the landlord pays the broker commission - typically 4 to 6 percent of total base rent over the lease term - shared between the listing broker and the tenant's broker. Even so, the commission is factored into the landlord's economics and can influence lease negotiation. If you are not using a tenant broker, you may be able to negotiate a concession equivalent to that side of the commission.
How much space do I need?
A common rule of thumb for office space is 150 to 250 square feet per employee for traditional assigned-desk layouts, or 75 to 125 square feet per person for open-plan or hybrid environments. Retail and industrial needs vary widely by business type. Commercial real estate brokers can benchmark your requirements against local market norms.