How to Calculate Rent for Commercial Property Accurately

As a commercial property owner, establishing the right rent for your space is one of the most important decisions that you will have to make. Charge too high a rent and your building will remain vacant for months. Charge too low a rent and you will leave money on the table.

The key to finding this sweet spot is to understand not only the market but also the special features of your property, as well as what is happening in the economy. This is an area where we, as property management in OKC, observe landlords grappling with it all the time. It is not simply a matter of setting a rent based on paying off the mortgage.

Why It Is Easy to Get Rent Wrong

Most landlords believe that how to calculate rent for commercial property is a straightforward process based on square footage and profit margin. But the truth is far from it. Commercial property leases are complicated contracts that may extend over several years, and so an error committed currently may haunt you in the future.

Fluctuations in the market are an enormous factor. A retail area that's thriving one year may be experiencing difficulties the very next year due to changes in infrastructure and the economy. If your information is dated or based on what the neighbors are saying, it's probably incorrect. In addition, the type of lease being Gross, Net, or Triple Net can have a drastic effect on the actual cost of the rent and the net income. Not including the hidden costs of the rent can be an easy mistake.

Doing the Math on Rent Yourself

If you decide to compute your rent on your own, you have to be ready to do the heavy lifting. First, you have to find similar properties in your market. You have to find spaces that have similar square footage, amenities, and location. You cannot rely on the listing price; you have to find the actual closing price, and that is often accompanied by concessions such as rent-free periods or tenant improvements.

The next thing you will have to do is evaluate the physical condition of your property. Does your property feature up-to-date heating and cooling, ample parking, and high-speed internet access? These are amenities that warrant a premium price. However, if your property is old, you will have to price your property aggressively.

Finally, you should carefully calculate your operating expenses. You should charge a rent that will cover your mortgage payment and additional expenses such as property taxes, insurance, and maintenance. If you are following a Gross Lease business model where you pay these expenses, your base rent should be higher compared to a Triple Net business model where your tenants pay these expenses.

Working with a Property Manager

While it’s possible to calculate it on one’s own, it’s a very risky process. That’s where working with a professional property management company such as First Class Property Solutions makes such a big difference. We know what’s going on in the market, and information that isn’t publicly available. We know exactly what tenants are paying today, as opposed to what they paid six months prior.

Furthermore, we provide an objective assessment when it comes to commercial property rent valuation. We can find straightforward changes that would result in a drastic jump in the rental value of your property. What is more significant is the fact that we are aware of the intricacies involved in a lease negotiation. We understand how to work on a deal that would give you the greatest returns while still being attractive to quality tenants.

Ensuring the Future of Your Investment



Getting commercial rent right is key to a successful investment. Whether you choose to do it on your own or seek advice, your aim is still the same: to maximize profit while keeping it occupied. Knowing how complex it can be, how do you calculate rent per square foot? The different factors impacting a commercial unit rent must be considered, and taking advantage of expert advice can mean that you maximize profit from your commercial property.