About

Securing a commercial location is one of the largest fixed costs for any business. Unlike residential rentals, commercial leases come in complex structures that can obscure the true monthly cash outflow. The two most common types are Gross Leases (all-inclusive) and Triple Net (NNN) Leases (base rent plus operating expenses).

This calculator helps business owners, facility managers, and real estate investors determine the "Effective Monthly Cost" of a property. By breaking down the base rate against the "Three Nets" (Property Taxes, Insurance, and Common Area Maintenance), users can avoid budget shortfalls. A low base rent in a NNN lease often disguises a high total occupancy cost once maintenance overheads are factored in.

Formulas

The calculation of the total lease obligation depends on the lease structure. The Total Annual Cost is derived as:

Cost_total = (Rate_base + Rate_NNN) × Area

Where the Triple Net (NNN) rate is the sum of its components:

Rate_NNN = Tax + Ins + CAM

To determine the monthly obligation:

Cost_month = Cost_total12

Reference Data

Expense Category	Description	Typical Cost Range (Annually)
Base Rent	The fixed amount paid to the landlord for the space.	$10 - $100+ / sq ft
Property Taxes (N1)	Local government levies based on assessed value.	$2.00 - $8.00 / sq ft
Insurance (N2)	Property and liability coverage for the building.	$0.30 - $1.00 / sq ft
CAM (N3)	Common Area Maintenance (lighting, landscaping, security).	$1.50 - $6.00 / sq ft
Utilities	Electricity, water, HVAC (often separate from NNN).	$1.50 - $4.00 / sq ft
Management Fee	Fee paid to the property management company.	3% - 5% of Gross Rent

Frequently Asked Questions

In a Triple Net lease, the tenant pays the base rent plus three additional expenses: property taxes, building insurance, and Common Area Maintenance (CAM). The landlord takes little to no financial responsibility for the building's operations.

CAM (Common Area Maintenance) covers the cost of maintaining shared spaces. This typically includes parking lot cleaning, snow removal, landscaping, lobby lighting, security services, and elevator maintenance.

Not necessarily. While a Gross Lease (or Full Service Lease) offers predictable flat payments, the landlord usually charges a higher base rate to buffer against rising utility or maintenance costs. NNN leases offer transparency but variable costs.

If specific figures aren't provided, a common rule of thumb in many markets is to estimate NNN expenses as 20% to 35% of the base rent, though this varies heavily by building age and location.