Commercial Lease Calculator (rent per sq ft or m², CAM, escalations & free rent)

Understanding the commercial lease calculator — concept and principle

This calculator works out the cost of a commercial (office, retail or industrial) lease from the area, the quoted rent and CAM charges per unit area, the yearly rent increase, the term and any free-rent months. It shows the first-year monthly payment, total base rent and total cost over the term, the effective rent per unit area and the final-year rate. Use it to compare lease offers or budget for a new space.

Base rent $5,833 plus CAM $1,667 a month; the base rent rises 3% each year to $31.51 per sq ft.

How it is calculated

Monthly base rent in year 1 = area × yearly rate ÷ 12 (or area × monthly rate).
CAM (common area maintenance, taxes and insurance in a net lease) is quoted the same way and kept flat here.
Rate in year k = first-year rate × (1 + increase)^(k − 1).
Total base rent = Σ yearly base rent − free-rent months × first-year monthly rent.
Effective base rent = total base rent ÷ (term × area).

The principle

Commercial rent is priced per unit of space so that different spaces can be compared. Annual escalations keep rent in step with inflation; compounding means later years cost noticeably more. Landlords often offer free-rent months as an incentive; the effective rent spreads the total actually paid over the whole term, which makes offers with different concessions and escalations comparable on one number.

Worked example

Default inputs: 2,500 sq ft, $28 base and $8 CAM per sq ft per year, 3% yearly increase, 5 years, 2 free months.

Year-1 base rent = 2,500 × 28 ÷ 12 ≈ $5,833 a month; CAM = 2,500 × 8 ÷ 12 ≈ $1,667; total $7,500 a month.
Yearly base rent: 70,000; 72,100; 74,263; 76,491; 78,786 (sum ≈ $371,640).
Less 2 free months: 371,640 − 2 × 5,833 ≈ $359,973 total base rent.
Plus CAM: 5 × 20,000 = $100,000, so the total cost ≈ $459,973.
Effective base rent = 359,973 ÷ (5 × 2,500) ≈ $28.80; final-year rate = 28 × 1.03⁴ ≈ $31.51.

Each point is the calculator re-run with only “Leased area (sq ft or m²)” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Leased area (sq ft or m²)	Monthly payment in year 1 (rent + CAM)
625	$1,875
1,250	$3,750
1,875	$5,625
2,500	$7,500
3,125	$9,375
3,750	$11,250
5,000	$15,000

How to read the result

The effective rent is the best single figure for comparing offers: here the escalations push it above the quoted $28 even after two free months. The monthly payment in year 1 is what to budget at the start; plan for it to rise each year. CAM charges are usually reconciled to actual costs, so they can change.

Common mistakes

Comparing quoted rents without accounting for escalations and free months.
Mixing yearly and monthly quotes, or square feet and square metres.
Forgetting CAM, taxes and insurance in a net lease.
Ignoring fit-out costs, deposits and agent fees.

Keep in mind: Lease terms vary widely and are legally binding. Have the lease reviewed by a qualified professional before signing. This is not legal or financial advice.

Frequently asked questions

What is a triple net (NNN) lease?

A lease where the tenant pays base rent plus a share of property taxes, insurance and maintenance.

What is effective rent?

The total rent actually paid over the term, divided by the term and area, after concessions.

How is rent quoted in Korea?

Often per pyeong or m² per month, usually with a deposit and separate maintenance fees.

Sources: Standard commercial-lease arithmetic: rent = area × rate, fixed-percentage annual escalations, free-rent concessions and effective rent over the term

Checked 9 Nov 2026. Rent = area × rate, fixed-percentage annual escalations, free-rent concession and effective rent over the term: standard commercial-lease arithmetic.

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