The Number on the Listing Isn't What You'll Pay
A landlord quotes you $25 per square foot for a 3,000-square-foot retail space. You do the easy math: $75,000 a year, or $6,250 a month. Then the lease arrives and there's a line you didn't price in: NNN at $9 per square foot. That's another $27,000 a year. Your real cost is $102,000, not $75,000. The quote they advertised was 26% lower than what you'll actually wire every month.
Here's the trap. Commercial leases come in three flavors, and the base rent number means something completely different in each one:
- NNN (Triple Net): You pay base rent plus your share of property taxes, building insurance, and Common Area Maintenance (CAM). The low quoted rate hides three separate pass-through costs.
- Gross (Full Service): The landlord folds taxes, insurance, and maintenance into one number. The rate looks high, but it's nearly all-in.
- Modified Gross: A split. The landlord covers some operating costs, you cover others (often utilities and your own janitorial). The terms vary lease to lease.
This is why comparing two spaces by their headline rate is a mistake landlords count on. A $32 Gross lease can be cheaper than a $25 NNN lease once you load in $9 of pass-throughs. The only way to compare them is to calculate the total annual cost for each, side by side.
Then there's the part that compounds: annual escalations. Most commercial leases raise your rent every year, typically 2% to 4%. On a five-year, $102,000 lease escalating 3% annually, you don't pay $510,000 over the term. You pay roughly $541,000. That extra $31,000 is the escalation clause working quietly in the background, year after year. Enter your base rent, CAM, taxes, insurance, and escalation rate above, and this calculator shows you the all-in cost for year one and the full lease term, so you can sign with the real number in front of you instead of the listing number.