Before you lease a commercial space, work out the monthly cost.

Illustrative photo: Nastuh Abootalebi / Unsplash

I often find the first conversation about a commercial space centres on the rent per square foot. It’s a useful number, but it doesn’t tell you what the business will pay each month.

Before comparing two spaces, I want to understand what each quoted figure includes and how the total has been calculated.

Start with the area and the rate

If a hypothetical space is 1,500 square feet and base rent is $18 per square foot per year, annual base rent is $27,000. Dividing by 12 gives $2,250 per month.

That is an illustration, not a quote for a current property. The lease must establish the area and the way rent is calculated.

Ask what sits on top

If the same hypothetical space has estimated additional rent of $9 per square foot per year, that adds $13,500 annually, or $1,125 monthly. Base rent plus that estimate would be $3,375 per month before applicable tax, separately charged utilities and any other tenant costs.

Additional rent is sometimes described as TMI, but the label alone does not tell you everything included. Ask for the actual breakdown, the estimate period and how adjustments or reconciliations work under the proposed lease.

Think about the cost of opening

A space that needs work may come with expenses before the first customer arrives. Layout changes, equipment, signage, internet, permits, professional advice and moving costs can all affect the decision. The amount depends on the business and the property.

It also helps to know who is responsible for the work, when possession is available and what must happen before the business can open. Those points belong in the discussions with the landlord and your advisers.

Compare the whole picture

Two spaces with different rates can serve very different needs. Size, condition, parking, location, required work and the fit for the business should sit beside the monthly figures.

My preference is to lay out the confirmed numbers clearly and mark estimates as estimates. That gives us a more useful conversation than comparing one advertised rate with another.

If you’re considering space in Kawartha Lakes, tell me what the business needs to do there. We can work through the property questions and identify the information still needed before you commit.