Calculate Lease Cost Per Square Foot
Looking for office or industrial rental space can be a chore because of the octopus-like nature of commercial leases. Instead of the straightforward presentation that you get with residential leases --- where you have the rent, utility costs and any deposits --- commercial leases include common areas and occasionally maintenance and insurance costs. Nolo.com notes that some landlords may even require you to hand over some of your profits, called "percentage rent." When comparing leases, look at both the basic cost per square foot and the cost per square foot when all the extra charges are included.
Instructions
1. Divide the given total cost of the lease by the total square footage amount that the landlord gives you. The resulting number is the basic cost per square foot and will be either per month or per year, depending on whether the original cost was per month or year.
2. Ask the landlord about how he arrived at the total square footage and where he measured from and to. Nolo.com warns some landlords may include the thickness of the walls in the square footage calculation, making the square footage sound bigger than the amount of usable space the building really has.
3. Measure the actual space you can use, if the landlord included wall thickness in the square footage.
4. Ask the landlord about all associated costs that he expects you to pay. Find out the amounts for insurance, maintenance, percentage rent, taxes, utilities and any other cost you might encounter. Add all the costs to the original basic rent. Ensure all the costs are either per year or per month to get an accurate total.
5. Divide the final cost from Step 4 by the actual, usable square footage. This gives you another cost per square foot amount, but this one is based on what you'll actually pay versus what you can use.
6. Multiply or divide the amount from Step 5 by 12 to get the per year or per month cost, if you need to convert the time frame so you can compare the costs to those of another lease.
Tags: square footage, square foot, basic cost, basic cost square, Calculate Lease, Calculate Lease Cost