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What Does $ Per Square Foot Mean in Commercial Real Estate?

  • marketing08413
  • 14 hours ago
  • 2 min read

If you’ve ever looked at a commercial real estate listing, you’ve probably seen rent quoted as $ per SF (dollars per square foot). At first glance, it can be confusing, but understanding this number is essential when comparing properties or budgeting for a new space.


What $ Per SF Means


$ per SF is the cost of leasing or buying one square foot of space. Instead of listing one lump sum for the rent, landlords and brokers use this method to standardize pricing. This makes it easier for tenants and investors to compare properties of different sizes.


How It’s Used in Leasing


In most U.S. markets, commercial rent is quoted per square foot per year.

  • Example: A space listed at $30/SF per year and sized at 2,000 SF would have an annual rent of:2,000 × $30 = $60,000/year (or $5,000/month).


In some markets (like parts of California), rent is quoted per square foot per month.

  • Example: A space listed at $2.50/SF per month and sized at 2,000 SF would have a monthly rent of:2,000 × $2.50 = $5,000/month (or $60,000/year).


Tip: Always confirm whether a rate is quoted monthly or annually—misunderstandings here can lead to major budgeting errors.


Why $ Per SF Matters


  • Comparison: Allows tenants to compare different properties on an apples-to-apples basis.

  • Budgeting: Helps calculate your total occupancy cost when multiplied by rentable square footage (RSF).

  • Clarity: Highlights whether additional costs (like CAM fees, utilities, or insurance) are included—or not.


Quick Recap


  • $ per SF = the cost for each square foot of space.

  • Multiply it by your total rentable square footage to calculate your actual rent.

  • Always check if the rate is quoted annually or monthly.


Final Thoughts


Understanding $ per SF is one of the first steps to demystifying commercial real estate leasing. Once you know how to interpret this number, you’ll be able to compare spaces more confidently, ask the right questions during negotiations, and avoid unexpected costs down the road.




Written by LevRose CRE with assistance from: LevRoseCRE.(2024)

ChatGPT [Open AI]. https://chat.openai.com/

 
 
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