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March 21, 2025 | by
Reviewed by real estate expert Jonathan Wasserstrum
Understanding the factors that influence commercial real estate price per square foot is crucial for businesses planning their office rent budgets. From calculation methods to lease structures, several elements play pivotal roles. Here’s a comprehensive guide to navigate these considerations effectively.
Commercial real estate prices are typically quoted on an annual per-square-foot basis. To determine your monthly rental rate, use the following formula:
Annual Cost = Price per square foot × Total square footage
Monthly Cost = Annual Cost ÷ 12
Example:
If the rate is $50 per square foot for a 3,000-square-foot space:
$50 × 3,000 = $150,000 annually
$150,000 ÷ 12 = $12,500 per month
This calculation provides the base rent. Depending on the lease structure and whether the rate is based on usable or rentable square footage, additional costs may apply.
Understanding the distinction between Usable Square Footage (USF) and Rentable Square Footage (RSF) is essential when determining how much you’ll pay per square foot of office space:
Usable Square Footage (USF): The area exclusively occupied by your business, including private offices and storage.
Rentable Square Footage (RSF): USF plus a proportionate share of common areas like hallways, lobbies, and restrooms.
The difference between USF and RSF is determined by the common area factor or load factor. For example: A building has a load factor of 15%, meaning 15% of your USF is added to account for common areas.
Always verify whether the quoted square footage is USF or RSF, as it significantly affects your total rental rate. (To calculate how much dedicated space your business will need, check out our Office Space Calculator.)
Your lease structure directly impacts what costs are included in your per-square-foot rate. Common types include:
Each structure distributes costs differently, so understanding the specifics is vital before signing.
Several factors influence the price per square foot in commercial real estate:
Location remains a primary determinant of price. For instance, in New York, one of the costliest and most desirable office markets in the United States, the median price per square foot in as of 2024 was approximately $100 per square foot per month—significantly hirer than other markets across the nation. But not all high-end markets are priced alike: in Los Angeles, a similarly desirable market, rents are more affordable at an average of $49 per square foot per year (as of 2023). It’s important to research the market you’re in to get a sense of the rental cost spectrum.
Buildings are categorized as Class A, B, or C based on quality, amenities, and location:
Features like concierge services, on-site dining, and wellness facilities can increase base rent or appear as additional fees.
Flexible lease options, such as short-term agreements, subleases, or shared spaces, may come at a premium. However, for businesses anticipating growth or change, the flexibility can outweigh the additional cost. Platforms like LiquidSpace and WeWork offer flexible office solutions, allowing businesses to adapt their space needs efficiently.
Navigating and negotiating commercial leases can be complex. A tenant rep broker advocates for your interests, helping you secure fair market terms, clarify cost breakdowns, and identify potential concessions.
Need expert assistance in finding your next office space? Contact us today to get started.
What is included in commercial real estate price per square foot?
The price typically includes base rent and may also factor in shared common areas depending on whether the space is quoted in usable or rentable square footage. Additional fees may apply depending on the lease structure.
How do I calculate the monthly cost of a commercial lease?
Multiply the quoted price per square foot by the total square footage (usually rentable square footage) to get the annual rent. Divide that by 12 to calculate your monthly office rent.
What is the difference between usable and rentable square footage?
Usable square footage is the area your business occupies exclusively. Rentable square footage includes usable space plus your share of common areas like hallways, restrooms, and lobbies.
What is a full gross lease vs. a triple net lease?
A full gross lease includes all building expenses in one flat rent. A triple net lease (NNN) means the tenant pays base rent plus all property taxes, insurance, and maintenance expenses.
Why is location so important in commercial real estate pricing?
Location affects demand, visibility, access to talent, and transportation — all of which influence the commercial real estate price per square foot. Prime locations command higher rents.
Are flexible leases more expensive?
Typically, yes. Month-to-month or short-term leases often cost more per square foot due to the flexibility offered, but they may be worth it for companies with uncertain headcount or short-term needs.
Should I work with a tenant-rep broker?
Yes. A tenant-rep broker works on your behalf — not the landlord’s — to negotiate favorable terms, clarify costs, and guide you through the leasing process.
SquareFoot is a new kind of commercial real estate company. Our easy-to-use technology and responsive team of real estate professionals delivers the most transparent, flexible experience in the market. Get in touch to start your search today.