You found a space. The landlord quotes you "$22 per square foot" and it sounds reasonable — until the LOI lands in your inbox and it's a wall of acronyms: CAM, NNN, annual escalations, TI allowance, "load factor," and a "base year stop." You're signing a 5- or 7-year commitment, you don't have a broker, and you have a nagging feeling that $22/sq ft is not actually what you're going to pay. You're right.
If you're signing your first or second commercial lease for a 3,000–15,000 sq ft retail, restaurant, or warehouse space, here's how to turn that confusing offer into a single, defensible total-cost number you can use to compare two spaces — or push back on the landlord before you sign.
The "per square foot" quote is a trap
That headline rate is almost always the base rent only. On a triple-net (NNN) lease, you also pay your pro-rata share of:
CAM (Common Area Maintenance) — parking lot, landscaping, lighting, security. Often $3–$12/sq ft and it can climb every year.
Property taxes & insurance — reassessed when the building sells, sometimes mid-lease.
Annual escalations — usually 2.5%–4% compounded on base rent. Over 7 years, a 3% escalation makes year-7 rent ~22% higher than year one.
Run the math the way it actually hits your bank account
To know your real number, multiply rentable square feet (not usable — that load factor adds 10–18%) by base rent, add CAM and taxes, then compound the escalation across every single year of the term. Add it all up. That total — not the $/sq ft — is what you're actually committing to.
Example: A 6,000 sq ft space at $22/sq ft base + $7 CAM with 3% annual escalation over a 7-year term isn't "$22/sq ft." It's well over $1.3M in total occupancy cost once you compound everything. Most first-time tenants never see that number until it's too late to negotiate.
The TI allowance can quietly cost you more
A "$40/sq ft tenant improvement allowance" sounds generous, but if your buildout costs $75/sq ft, you're financing the gap — often through amortized rent the landlord charges back to you with interest. Always net the TI allowance against your real construction quote, and check whether it's being repaid through your rent.
Get one number — today
You don't have weeks to learn commercial real estate before responding to an LOI. You need a defensible total-cost-of-occupancy figure right now, so you can either compare Space A vs. Space B apples-to-apples, or walk into the negotiation saying "your effective cost over the term is $X, and here's where it's high."
That's exactly what the Lease Cost Calculator for Commercial Tenants does. You plug in your square footage, base rent, CAM, taxes, escalation rate, term length, and TI allowance, and it returns your true total cost over the full term — broken down year by year — so you can spot which line item is inflating the deal and bring real leverage to the table. No broker required.
Before you sign, ask these three questions
"Is this gross or NNN — and what's the current CAM per square foot?"
"What's the annual escalation, and is it on base rent only or the full charge?"
"Is the TI allowance a true allowance, or is it amortized back into my rent?"
The landlord does this every day. You're doing it for the first time. The fastest way to level the field is to show up already knowing your total number. Run your lease through the calculator before you reply to that LOI — it takes about two minutes and could save you tens of thousands over the term.
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