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What does $/SF/yr mean? How to calculate rent per square foot
The short answer
$/SF/yr means dollars per square foot per year: the rent for one square foot of space for one year. It is how New York quotes commercial rent, and how most US office markets do. To turn a rate into rent:
- Yearly rent = the rate x the square feet.
- Monthly rent = the yearly rent / 12.
A 2,500 SF space at $60/SF/yr rents for $150,000 a year, or $12,500 a month.
The same quote can appear as $60/SF, $60 PSF, $60/RSF, "$60 a foot" or just "$60" on a New York lease listing. For a quick estimate, divide the rate by 12 for the monthly rent per square foot, then multiply by the size:
| Rate a year | Per SF a month | Monthly rent per 1,000 SF |
|---|---|---|
| $30/SF/yr | $2.50 | $2,500 |
| $45/SF/yr | $3.75 | $3,750 |
| $60/SF/yr | $5.00 | $5,000 |
| $75/SF/yr | $6.25 | $6,250 |
| $90/SF/yr | $7.50 | $7,500 |
| $120/SF/yr | $10.00 | $10,000 |
A 5,000 SF space costs five times the last column. The commercial rent calculator does the math for any size and any unit.
What do the abbreviations on a listing mean?
- /SF/yr, /SF/YR, PSF, /SF: per square foot per year. On a New York lease listing a bare "/SF" means per year.
- /SF/mo: per square foot per month. Multiply by 12 for the yearly rate.
- /mo: the whole monthly rent, not a rate.
- RSF and USF: rentable and usable square feet, explained below.
- FS, MG, NNN: full service, modified gross and triple net. They tell you which building costs the rate includes.
- +E or "plus electric": electricity is billed on top of the rent.
- $/SF on a sale listing: the asking price divided by the square feet. You pay it once, so it is not a rent.
Is a rent quote yearly or monthly?
New York quotes rent per square foot per year. Some markets, notably in California, quote a monthly rate instead, so a $3.50 quote there means $3.50 per SF a month, which is $42 per SF a year. Before you compare two spaces, make sure both rates use the same unit. Two checks help:
- The size of the number. Office and retail rents in New York run in the tens of dollars per square foot a year. The guide to how much commercial rent costs in NYC shows what buildings in each borough collect. A single-digit rate on a New York office or retail listing is probably a monthly figure or a typo, so ask.
- Work back from the total. If a listing also shows a monthly rent, multiply it by 12 and divide by the square feet. $12,500 a month for 2,500 SF is $150,000 a year, or $60 per SF a year.
Is rent charged on rentable or usable square feet?
New York office rent is charged on rentable square feet (RSF), which adds a share of the building's lobby, corridors, restrooms and mechanical rooms to your suite. The area you can actually furnish is the usable square feet (USF), and the gap between them is the loss factor.
A 5,000 RSF suite with a 20% loss factor has 4,000 usable SF. At $60 per rentable SF, the rent is $300,000 a year, which works out to $75 per usable square foot. When two buildings have different loss factors, compare what you pay per usable foot. The guide to rentable vs usable square feet shows how to check the number.
What does the quoted rate not include?
The quoted rate is base rent. What else you pay depends on the lease structure:
- Full service: the rate covers the building's real estate taxes and operating costs at the start of the lease. You usually pay your share of increases after a base year, and electricity is often billed separately.
- Modified gross: some building costs are in the rate and others are billed on top. In New York, electricity is the most common one.
- Triple net (NNN): you pay your share of the building's taxes, insurance and common area costs on top of the rate. A $40 NNN rate with $10 per SF a year of those charges costs $50 per SF a year before electricity, about the same in the first year as a $50 full service rate.
The guide to gross vs net leases covers each structure and its escalations. In Manhattan south of 96th Street, a tenant whose base rent is $250,000 a year or more also owes the city's Commercial Rent Tax, which the Commercial Rent Tax calculator works out.
Does the rate change over the lease?
The quoted rate is usually the first year's rent. Most leases raise it every year: at 3% a year, $60/SF/yr becomes $67.53 in year 5.
Free rent works the other way. On a five-year lease at a flat $60, six months of free rent brings the rent you actually pay down to an average of $54.00 per SF a year over the term. That average after concessions is the net effective rent, and it is the fairest way to compare two offers with different increases, free rent and build-out allowances. The commercial rent calculator builds the year-by-year schedule, and the tenant improvement allowance calculator shows what a build-out allowance is worth.
What does price per square foot mean when you buy?
On a sale listing, price per square foot is the asking price divided by the size: a 4,000 SF office condo at $3,000,000 is $750 per SF. It is a one-time price, so it cannot be compared with a rent per square foot without the costs of owning. The guide to buying a commercial condo in NYC covers those costs, and the transfer tax calculator shows the taxes at closing.
What should you ask about any quoted rate?
- Is it per year or per month?
- Is it per rentable or usable square foot, and what is the loss factor?
- Is the lease full service, modified gross or net, and how is electricity billed?
- How much does the rate go up each year?
- How much free rent and build-out allowance come with it?
- For a store, does the rate cover the basement or a second floor, or only the ground floor?
Every lease and sublease listing page on Leasemark shows the asking rent in $/SF/yr next to an estimated monthly rent: start with office space for lease in NYC or retail space for lease. If you know what you need, post a requirement with your size, budget and neighborhoods. Owners and brokers with matching space can ask for an intro, and you decide who gets your contact details.
This guide is general information, not legal, tax or financial advice.
