Rental Rate Calculations

Below is a simplified summary of rental rates and calculating the monthly cost of a space. Other factors such as tenant improvement costs, free rent, abated rent and amortization schedules determine the effective monthly rent.

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 called "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
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   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