Legal Advice

How is Commercial Property Rent Calculated?

If you are looking to lease a property for commercial reasons, it is wise to consult with your lawyers & solicitors well before you sign anything. They can ensure that the lease is drawn up properly so that you know exactly what you will have to pay. And they can add clauses to protect you from many potential problems. So how exactly is rent for a commercial property calculated? Several things are taken into consideration.

  • The main consideration for commercial rent is the size of the property to be leased. For the most part it will be based on the square metre, but that is not all.
  • The location is a prime consideration. When the locations is in a place where there are many potential customers, e.g. a mall, then more will be added to that square metre charge.
  • The condition of the building is also taken into consideration. A building that is run-down, unpainted or with paint peeling, the roof leaks or the floor covering is old and dirty would be much cheaper than a property that is spick and span – for the reason that no one would really want the former. It would cost a fortune to fix up.
  • Nearby services and surrounding tenants all have a small part to play in the amount of rent charged for such premises. More is better for business so the price goes up, less is not so good for business so the price will be dropped.

If you want to know whether the rental price your landlord has charged you is fair you need to do your research. In fact, this should have been done before you signed, but it is never too late. The lease has an end date and you can renegotiate, right? So on to that research.

  • Estate agents are your friends. A real estate agent usually knows a great deal about business rentals since they frequently find them for business people. They get to know what the going rental rate is in a particular location and will be happy to discuss it with you.
  • You can go online and look at similar properties to yours. Remember they should be similar in size, location and amenities as well as in good repair. The rental price will usually be plainly in sight. If it’s not, shoot them an email and inquire about it. Regular research will soon make you familiar with the price of rent in different areas.
  • Ask other tenants in the area what they are paying. Most will be happy to discuss it with you, especially if they think they are being ripped off.

Once you know for sure that you are paying too much you’ll be able to watch your step more carefully next time the lease is due for renewal.