### Questions about commercial real estate?

Perhaps you're thinking of purchasing a small apartment building, or industrial lease space? Or, perhaps you are considering leasing commercial space. Below are a few calculations that you might find helpful?

### How do I calculate a triple net lease rate?

It's where the tenant pays rent as well as property insurance, property maintenance, and property taxes.

**Here's an example:**

Usually the rent is quoted per square foot, say $22 per square foot. Then the building operating expenses (as noted above) are also quoted as dollars per square foot, say $8.50 per square foot, and are then added onto the rent. ($22 + $8.50 = $30.50 per square foot).

Multiply these two numbers by your square footage that you plan on renting (say 8550 sf), to get your total rent and expenses, or Gross total monthly payment. ($30.50 x 8550 sf = $260,775 equals the total amount paid per year.) Divide this amount by 12 to get your gross total monthly payment. ($260,7775/12=$21,731.25 per month).

Calculate them separately to give you the basic lease calculation. ($22 x 8550 = $188,100) Divide this by 12 for your basic lease per month. ($188,100/12=$15,675 per month is your base lease amount).

Calculate the estimated property operating expenses as per your information. In this example, it would be $8.50 x 8550 sf = $72,675 per year. Divided by 12 gives you $6,056.25 per month in estimated operating expenses.

Commission is generally negotiated and will vary depending on the square footage of the property, age and condition of the property, and of course, the length of the lease but generally speaking, the commission a realtor might earn could be anywhere from one month of gross rent (in this case it would be $21,731.25) for a one year lease, up to two months gross commission for a 2 year lease, etc.

# Ready to find out more?

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