Q:

# How can you calculate rent per square foot?

A:

Rent per square foot is calculated by dividing the rent amount by the number of square feet rented. Using the annual rental amount produces the cost of square foot per year, while using the monthly rental amount produces the cost of square foot per month. This calculation is solely for office or retail spaces. The rent per square foot calculation is different for industrial buildings.

Industrial units are quoted on a per square foot, per month basis. Industrial spaces also have two distinct components, known as the “warehouse” portion and the “office” portion. Each portion is calculated at a distinct rate, then combined to determine the industrial cost per square foot. The calculation for industrial rental rates is (warehouse square footage x warehouse rent) + (office square footage x office rent).

Calculating rent per square foot is more complex if the square foot of the rental space is unknown. To find the square foot of the space, measure the width and length of the unit then multiply the two figures. After calculating the square footage of the space, determine the total annual rent. This figure is typically decided by the owner of the property. Multiply the monthly rental amount by 12 to determine the annual rental amount then divide this figure by the square footage of the unit.

For example, if renting a 1,500 square foot apartment costs \$2,000 per month the annual cost is \$24,000. To determine the annual cost per square foot divide the annual rent amount by the square footage or \$24,000 by 1,500. The annual cost per square foot is thus \$16. To determine the monthly rate, divide the annual square footage by 12 or the monthly rental amount by the total square footage (16/12 or \$24,000/1,500=1.33).

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