Understanding Commercial Rental Rates

Submitted by Anonymous (not verified) on Thu, 02/06/2020 - 07:02
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Here we've simplified a summary of rental rates and calculating the monthly cost of space.

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

Five Locations to Serve You

Boise Office
250 S 5th Street, 2nd Floor
Boise, Idaho 83702
Main Phone: 208.378.4600
Main Fax: 208.947.0869

Twin Falls Office
195 River Vista Place, Suite 204
Twin Falls, Idaho 83301
Main Phone: 208.944.9694

Idaho Falls Office
1135 Pier View Drive, Suite 140
Idaho Falls, Idaho 83402
Main Phone: 208.227.8148

Pocatello Office
151 N. 3rd Street
Pocatello, Idaho 83201
Main Phone: 208.227.8148

Coeur d'Alene Office
PO Box 663
Coeur d'Alene, Idaho 83816
Main Phone: 208.378.4600