Commercial Lease Cost Calculator
Get your true total lease cost — with the CAM/NNN load and annual escalations most quotes leave out of the "base rent."
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
This calculator totals what a commercial lease really costs over its full term — including the NNN pass-throughs and annual escalations that quoted "base rent" leaves out. A gross (full-service) lease is all-in: the landlord covers property taxes, insurance, and common-area maintenance (CAM). An NNN (triple-net) lease pushes those three costs onto you, on top of base rent, so a $24/sf quote can really be $32/sf. The tool levelizes everything — escalations, free-rent months, and any tenant-improvement (TI) allowance — into one effective rent per square foot so you can compare offers apples to apples.
The formulas
- Loaded rent per square foot (year 1)
- base rent per sq ft + (NNN lease ? CAM + taxes + insurance per sq ft : 0)This is the gross-equivalent of an NNN quote — the number to compare against a gross lease.
- Rent in year n
- square feet × loaded rent per sq ft × (1 + annual escalation)^(n − 1)Base and the NNN pass-throughs are both escalated at the same rate.
- Free-rent value
- free months × (year-1 annual rent ÷ 12)
- TI allowance value
- TI allowance per sq ft × square feet
- Total term cost
- sum of every year’s rent − free-rent value − TI allowance value
- Effective rent per sq ft per year (levelized)
- total term cost ÷ (square feet × term years)This straight-lines concessions and escalations into a single comparable rate.
Worked example
- Say you are quoted 2,000 sq ft NNN at $24/sf base with $8/sf of CAM, taxes, and insurance, escalating 3%/yr over a 5-year term with 2 free months.
- Loaded rent = $24 + $8 = $32/sf, so year-1 rent = 2,000 × $32 = $64,000.
- Escalating 3%/yr, the five years run $64,000, $65,920, $67,897.60, $69,934.53, and $72,032.56 — a total of $339,784.69, with year-5 rent 12.6% above year 1.
- Two free months are worth 2 × ($64,000 ÷ 12) = $10,666.67; there is no TI allowance in this example.
- Total term cost = $339,784.69 − $10,666.67 = $329,118.02.
- Effective rent = $329,118.02 ÷ (2,000 sq ft × 5 years) = $32.91/sf/yr — the single number to compare this deal against other offers.
Rates, benchmarks & sources
- Levelized effective rent = total term cost ÷ (area × term); free rent and TI treated as effective discounts — Commercial leasing convention (straight-line effective rent)
- Gross (full-service) vs NNN (triple net: tenant pays taxes, insurance, CAM on top of base rent) — Standard lease-structure definitions
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- CAM, taxes, and insurance are entered as one fixed $/sf figure and escalated at the same rate as base rent — in a real NNN lease these are uncapped pass-throughs that are reconciled annually and can jump faster than the escalation rate.
- It assumes a fixed annual escalation percentage; leases with CPI-linked bumps, stepped schedules, or fair-market-value resets need year-by-year modeling.
- It does not model percentage rent (retail leases that take a share of sales), security deposits, utilities, janitorial, or parking charges.
- Free rent is valued at year-1 rates and the TI allowance at face value; it does not discount future dollars, so long terms slightly overstate late-year costs in today’s money.
- The TI allowance offsets your cost here only if your buildout actually uses it — see the Tenant Improvement calculator for the out-of-pocket side.
Frequently asked questions
What is the difference between a gross lease and an NNN lease?
In a gross (full-service) lease, the landlord pays property taxes, building insurance, and common-area maintenance — your rent is all-in. In an NNN (triple-net) lease those three "nets" are passed through to you on top of base rent, billed per square foot. Neither structure is inherently cheaper; the same space can be quoted either way. The comparison that matters is the loaded, gross-equivalent rate — which this tool computes.
What is CAM and why should I ask about its history?
CAM (common-area maintenance) covers shared costs like lobbies, parking lots, landscaping, and property management, and in an NNN lease it is billed to tenants alongside taxes and insurance. Unlike your base rent, CAM is typically a pass-through of actual costs, reconciled each year — so it can rise faster than your negotiated escalation. Asking for several years of CAM history, and negotiating a cap on annual CAM increases, protects you from the fastest-growing line in the lease.
How much does a 3% annual escalation really add up to?
Escalations compound, so they grow faster than they look. On the default 5-year term, 3%/yr puts year-5 rent 12.6% above year 1 — and the effect keeps accelerating on longer terms. This is why the tool reports a levelized effective rent for the whole term instead of letting the year-1 number stand in for the deal.
How do free rent and a TI allowance change what I actually pay?
Both are landlord concessions that reduce your total cost without touching the face rent. The tool values free months at year-1 rent and the TI allowance at its face amount per square foot, subtracts both from the term total, and folds the result into the effective rent per square foot. That lets you weigh, say, two free months against a higher base rate on a competing space — sometimes the "more expensive" quote is the cheaper deal.
Which number should I use to compare two competing spaces?
The levelized effective rent per square foot per year. It rolls escalations, NNN pass-throughs, free rent, and TI into one rate, so a $24/sf NNN offer and a $31/sf gross offer become directly comparable. Also glance at the year-by-year schedule: two deals with the same effective rent can have very different cash-flow timing, which matters if your early months are lean.
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themoneysheet provides educational estimates, not financial, tax, or legal advice. Figures use published rates and formulas current as of the date shown, but your situation may differ. Consult a qualified professional (CPA, attorney, or licensed advisor) before making financial decisions. Rates shown are estimates; actual offers depend on lender underwriting.