When leasing space in Calgary commercial real estate, one of the most common questions tenants ask is: “How is rent calculated, and what does it include?” Understanding the structure of your lease, the type of agreement, and the costs you’ll be responsible for is critical to avoiding surprises and budgeting effectively.
1. Commercial Rent Is Typically Quoted Per Square Foot
In Calgary, commercial rent is usually expressed as a price per square foot (psf) — either annually or monthly. To calculate your total rent:
Multiply the rentable square footage by the quoted rate.
For example, if your lease rate is $25 psf annually for a 1,200 sq. ft. space, your annual base rent would be $30,000 (or $2,500 per month).
2. Rentable vs. Usable Square Feet
Commercial leases are based on rentable square footage, which includes:
- Your exclusive-use space (usable square footage)
- A proportionate share of the building’s common areas (e.g., lobbies, hallways, shared washrooms)
The load factor is the ratio of rentable to usable square feet, and it determines how much shared space you’re paying for. Always ask your broker for this number.
3. Types of Commercial Leases
Gross Lease
- You pay a single monthly amount.
- The landlord covers most or all operating expenses — including property taxes, insurance, maintenance, and sometimes utilities.
- Predictable costs for tenants.
Net Leases (Single, Double, or Triple Net / NNN)
- You pay base rent plus operating costs.
- In a Triple Net (NNN) lease, the tenant pays:
- Property taxes
- Building insurance
- Common Area Maintenance (CAM)
- Often, utilities are billed directly
- Common in Calgary commercial retail spaces.
Modified Gross Lease
- A hybrid between gross and net leases.
- Some costs (e.g., property taxes) are split between landlord and tenant.
Percentage Lease
- Often used in retail.
- Tenant pays base rent plus a percentage of gross sales.
4. What Operating Costs Are Included?
Depending on the lease type, your rent may include:
| Expense Category | Gross Lease | Net Lease (NNN) | Modified Gross |
|---|---|---|---|
| Property Taxes | Included | Tenant pays | Split/shared |
| Building Insurance | Included | Tenant pays | Split/shared |
| Maintenance (CAM) | Included | Tenant pays | Split/shared |
| Utilities | Sometimes | Often tenant pays | Sometimes |
Tip: Every lease is different. Always clarify which expenses are included and what is billed separately in your lease.
5. Common Area Maintenance (CAM) Explained
CAM charges cover the upkeep of shared areas like:
- Hallways
- Parking lots
- Landscaping
- Building exteriors
These charges are usually allocated proportionally based on the tenant’s share of the building’s total rentable area.
6. Rent Escalations
Most lease terms see annual gross rent increases, which may be due to:
- A fixed percentage (e.g., 2–4% annually)
- Tied to the Consumer Price Index (CPI)
- Based on operating cost increases
7. Other Costs Tenants Should Budget For
- Utilities: Electricity, water, natural gas
- Interior maintenance: Fixtures, HVAC within leased premises
- Tenant insurance: Covers business operations and contents
- Plate glass insurance: Covers broken windows, doors, glass within tenant space
8. Lease Structure and Predictability
Gross leases offer more cost predictability, making them ideal for new or smaller businesses.
Triple net leases offer landlords predictable income, but tenants bear variable operating costs that landlords do not profit from.
It’s essential to understand how the lease type affects your total occupancy cost or gross rent, not just the base rent.
9. Agent Commissions and Who Pays Them
In most cases, the landlord pays the leasing agent’s commission, which is a percentage of the total lease value. This means tenants can benefit from broker representation at no direct cost.
Final Thoughts: Know What You’re Paying For
When navigating commercial leasing in Calgary, it’s critical to understand not just your rent per square foot, but also what’s included — and what isn’t. Lease types, CAM charges, utility responsibilities, and escalation clauses can all affect your bottom line.
Always consider consulting with a knowledgeable broker or legal advisor to fully understand your obligations and negotiate favorable terms.
Looking to lease commercial space in Calgary? Contact Leaseco Realty today to get clarity on rent structures and find the right fit for your business.
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