LEASING GUIDE
Commercial lease costs explained.
Commercial asking rent is not the full occupancy cost. A useful comparison separates base rent, additional rent, utilities, improvements, fixturing, escalation and other obligations over the likely term.
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Base rent and additional rent
Many commercial leases separate the landlord's base return from recoverable property expenses. Definitions and inclusions vary, so compare both the amount and what the tenant is responsible for paying directly.
One-time occupancy costs
Deposits, design, legal work, permits, construction, furniture, technology, moving and downtime can materially affect the first years of occupancy even when lease economics look competitive.
Term, escalation and flexibility
Annual increases, renewal rights, expansion options, assignment provisions and restoration obligations can change the risk profile. These terms deserve attention alongside the initial rental rate.
Common questions
What is additional rent?+
It commonly refers to a tenant's share of property operating costs and taxes, but the lease definition controls and should be reviewed by qualified legal counsel.
How can I compare two leases?+
Use a consistent term and include all known rent, operating, improvement, incentive and one-time costs. Scenario tools can help, but uncertain inputs should be identified.
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