What factors influence commercial rent rates?


Quick Answer

Lease term, property size, storage, views, location and tenant circumstances are all factors that influence commercial rent rates, reports About.com. Supply and demand for rental space and responsibility for utility and service costs can also impact the rent price, mentions CNN Money and CityFeet. Signing a lease locks the tenant into a rate regardless of the current conditions.

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Full Answer

The success and income of a business, as well as the type of business, can also affect commercial rent rates, mentions About.com. In certain conditions, a landlord calculates a minimum base rent and then applies more advanced formulas. The landlord may require a percentage of the business' income that exceed a specified amount or a percentage of all gross receipts. This approach offers the landlord financial security with the base rent and charges a tenant based on financial performance of the associated business.

In some instances, a quoted rate represents the price per square foot on a monthly basis, states CityFeet. Different jurisdictions, however, establish separate standards and regulations. As of 2016, some cities, such as San Francisco, quote prices on an annual basis. Landlords generally list urban office leasing on an annual basis but list industrial and retail properties on a monthly basis.

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