How the calculation works
Annual base rent = rentable square feet × quoted rate × 12 for a monthly rate, or × 1 for an annual rate. Annual operating expenses = square feet × additional annual expense rate. Add 12 months of other recurring costs to estimate recurring occupancy expense.
First-year cash requirement adds tenant-funded improvements, other upfront costs and the refundable deposit. The deposit is shown separately because cash committed is not the same as an expense. Enter improvement costs after allowances you expect to receive within the first year; separately plan for any reimbursement delay.
A worked example
At 2,000 SF, $24/SF/year base rent and $8/SF/year additional expenses, rent plus operating expenses total $64,000 annually. Another $300 per month brings recurring costs to $67,600, or about $5,633 per month. With $25,000 of upfront costs and a $4,000 refundable deposit, first-year cash required is $96,600.
Budgeting illustration only. Assumes 12 full months at constant rates. Excludes escalations, free rent, financing, tax effects and unentered costs. Verify rentable area, inclusions, actual expense estimates and the lease. This is not a quote or legal or financial advice.
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