What are the different types of Lease Rental Rates?

In General Area - Asked by Dora V. - Sep 21, 2008
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Answer(s)

Rick L.
Broker/Agent
Atlanta, GA

$/SF/Month, $/SF/Year, $ Amt/Month, $ Amt/Year. Most of the United States quotes rental rates on the $/SF/Year basis (mostly applies to commercial property like office, industry, retail, etc.). For example: tenant A leases 1,000 square feet of space for $1.00/SF/Year. How much rent does A pay in a year? If it’s $1.00 PER square foot PER year ($1.00/SF/Year), and A leases 1,000 SF, then they pay $1,000 to rent the space for a year. California, on the other hand (which is the Loop’s strongest state), typically quotes rent on a $/SF/Month basis. So using the same example above, how much money would that tenant pay on a $/SF/Month basis? They pay $1.00/SF/Year, so how much is that per month? It’s 1.00 divided by 12 months, which gives you ~$.08/SF/Month. So why do we have those other choices? Well, thing is a lot of people don’t even quote rental rates on a PER SQUARE FOOT basis, but instead quote the lump sum amount for the rent on a per month basis (like you’d pay rent in an apartment building). So we give users the option of specifying that the rental rate is, for example, $3,000 per month. We also stuck $ Amt/Year in the system for the odd person who wants to quote the rental rate on a $ Amount per Year basis (but that is atypical). So having said all of that, as long as you have the rental rate quoted in one of the four ways, AND you know how much space is available for rent, you should be able to easily figure out the other ways to quote the rental rate (look at any Property Profile for lease on LoopNet and you’ll see a toggle that switches between the various lease rate types).

Sep 21, 2008
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Chris S.
Broker/Agent
Coeur D'alene, ID

NNN
MG
FSG
NNN stands for triple net. In this structure the tenant pays rent plus all expenses.
MG stands for modified gross. In this structure the tenant pays rent plus some portion of expenses.
FSG stands for full service gross. In this structure the tenant pays rent and landlord covers all expenses.
There are a variety of hybrids, but those are basic three structures of leases.

Jan 16, 2009
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