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Commercial rent calculator
Turn an asking rent quoted per square foot into what a tenant actually pays: net rent plus TMI (additional rent) per year and per month, with annual escalations, free-rent months and the total over the term. Amounts in CAD, before HST; nothing leaves your browser.
Results (before HST)
- Year 1 net rent
- $192,000
- Year 1 TMI
- $75,000
- Year 1 gross (annual)
- $267,000
- Year 1 gross (monthly)
- $22,250
- Gross per sq ft (year 1)
- $22.25
- Total over the term
- $1,394,354
- Effective net rent /sq ft/yr
- $16.99
| Year | Net rent | TMI |
|---|---|---|
| 1 | $192,000 | $75,000 |
| 2 | $197,760 | $75,000 |
| 3 | $203,693 | $75,000 |
| 4 | $209,804 | $75,000 |
| 5 | $216,098 | $75,000 |
All amounts in Canadian dollars. Calculated in your browser; nothing is sent or saved.
How it’s calculated
- Annual net rent
Net rent = area (sq ft) × net rent per sq ft per year - Annual additional rent
TMI = area (sq ft) × TMI per sq ft per year - Gross occupancy cost
Gross = net rent + TMI; monthly = gross ÷ 12 - Escalation
Net rent in year n = year-1 net rent × (1 + escalation)^(n − 1)
Worked example (illustrative numbers)
- A tenant leases 12,000 sq ft at $16.00/sq ft net plus TMI estimated at $6.25/sq ft.
- Year 1: net rent $192,000 + TMI $75,000 = $267,000 a year, or $22,250 a month ($22.25/sq ft gross).
- Over a 5-year term with net rent rising 3% a year: total net rent ≈ $1,019,354 and TMI $375,000 (held flat), so about $1,394,354 in total.
- Average (effective) net rent over the term ≈ $16.99/sq ft/year.
Illustrative figures for a fictitious lease; they are not market rents or TMI for any building or city.
How commercial rent is quoted in Canada
Most Canadian commercial space is leased on a net basis: the asking rent is a net rent per square foot per year, and the tenant also pays its share of the property's operating costs and realty taxes as additional rent, usually called TMI (taxes, maintenance and insurance) or CAM. A listing that says "$16.00 net + $6.25 TMI" means a starting occupancy cost of $22.25 per square foot per year before HST.
TMI is an estimate for the current year. It is reconciled against actual costs after year-end and changes from year to year, which is why this calculator holds it flat and labels it as an estimate. Gross or semi-gross leases bundle some or all of these costs into the rent instead.
Escalations, free rent and the effective rent
Leases often step the net rent up during the term, either by a fixed percentage or by fixed dollar amounts per square foot. Landlords may also offer free net-rent months at the start of a lease, sometimes alongside a tenant improvement allowance. Comparing offers on the face rent alone can mislead; the average net rent over the term (the effective rent) is a fairer comparison.
This calculator applies a single annual percentage step to the net rent and takes free months off the first year's net rent. It does not model fixturing periods, tenant improvement allowances, commissions or percentage rent; check the offer to lease for those.
HST and other costs
HST is generally charged on commercial rent in Ontario, on both the net rent and the additional rent, so a tenant's cash cost is higher than the figures shown here. Utilities the tenant pays directly, insurance it carries itself and its own improvements are also outside this calculation. See the HST guide linked below for how listings usually word it.
Estimates for marketing and screening only. This is not an appraisal, a valuation opinion, or financial, legal or tax advice.
Using the numbers in a lease brochure
In a for-lease brochure, show the net rent and the TMI estimate separately, with the year of the estimate, and give the unit areas in the same measure as the floor plans. OfferingStack has fields for the net rent and the additional rent per square foot (with the year of the TMI estimate), and its availability page lists each unit with its area; fields and pages without data are left out rather than shown empty.
Questions
What does "net + TMI" mean?
The net rent is the base rent per square foot per year. TMI (taxes, maintenance and insurance) is additional rent that covers the tenant's share of realty taxes and operating costs. The tenant pays both, so the starting occupancy cost is net rent plus TMI.
How do I calculate monthly rent from a per-square-foot rent?
Multiply the area by the net rent and by the TMI per square foot, add the two, and divide by 12. 12,000 sq ft at $16.00 net + $6.25 TMI is $267,000 a year, or $22,250 a month before HST.
What is effective rent?
The average net rent over the term after escalations and free-rent months, expressed per square foot per year. It lets you compare offers with different rent steps and incentives.
Is HST included?
No. Figures are before HST, which is generally charged on commercial rent in Ontario.
Is my data saved?
No. The calculation runs in your browser and nothing you type is sent to OfferingStack.
Related
Put the numbers in a finished offering memorandum.
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