Business Rent Calculator
Commercial rent is often the biggest expense. Evaluate lease costs, affordability, and impact on profitability with comprehensive analysis.
How the Business Rent Calculator works
Analyze lease terms, CAM charges, escalations, and total occupancy costs. Calculate rent ratios, break-even requirements, and compare locations with profitability impact modeling.
Rent can make or break a business. This calculator ensures your lease supports profitability, not landlord wealth, with comprehensive affordability analysis.
How it works
Tutorial
Commercial rent often represents the largest fixed expense, making affordability analysis critical before signing leases. Understanding true occupancy costs including CAM charges, escalations, and profitability impact prevents overcommitting to spaces that strangle cash flow.
You have two options: use the calculator above for comprehensive lease affordability analysis, or follow this guide to manually evaluate business rent.
The Formula
| Metric | Formula |
|---|---|
| Total Occupancy Cost | Base Rent + CAM + Taxes + Insurance + Utilities |
| Rent Ratio | (Total Occupancy ÷ Gross Revenue) × 100 |
| Break-Even Revenue | Total Fixed Costs ÷ Gross Margin % |
Step-by-Step Calculation
Here’s a complete commercial lease affordability analysis.
Step 1: Calculate Total Occupancy Cost
Add all location-related expenses:
| Cost Component | Monthly Amount |
|---|---|
| Base Rent (2,000 sq ft @ $30/sf) | $5,000 |
| CAM Charges | $800 |
| Property Taxes (NNN) | $500 |
| Insurance | $300 |
| Utilities | $600 |
| Total Occupancy Cost | $7,200 |
Calculation: $5,000 + $800 + $500 + $300 + $600 = $7,200/month
Step 2: Calculate Rent Affordability Ratio
Determine if rent is sustainable:
| Metric | Amount |
|---|---|
| Total Monthly Occupancy | $7,200 |
| Current Monthly Revenue | $60,000 |
| Projected Monthly Revenue | $75,000 |
| Current Rent Ratio | 12% |
| Projected Rent Ratio | 9.6% |
Calculation: ($7,200 ÷ $60,000) × 100 = 12%
Step 3: Calculate Break-Even Requirements
Determine minimum revenue needed:
| Step | Calculation | Result |
|---|---|---|
| Total Fixed Costs | Rent + Payroll + Other | $25,000 |
| Gross Margin % | After COGS | 40% |
| Break-Even Revenue | $25,000 ÷ 0.40 | $62,500 |
Final Answer: Need $62,500 monthly revenue to break even
What This Means
At 12% of revenue, rent is borderline high but acceptable if growing to $75,000/month. Retail typically targets 8-10% rent ratio, while restaurants can handle 6-8%. Above 15% signals unaffordable rent for most businesses.
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