How to read this result
In the default example, annual base rent is $150,000.00. Results describe this input scenario; they are not a recommendation.
Change one assumption at a time to see how it affects the scenario. Compare periods and cost definitions consistently. Negative results show a modeled shortfall; an unavailable ratio needs a valid denominator.
Formula and methodology
Multiply rentable area by annual base rent per square foot. Add area-based annual CAM, tax, insurance and other pass-through allowances. Divide total annual occupancy cost by 12 for its monthly average.
Enter percentages as whole numbers: 5 means 5%. When used as a factor, the calculation divides a percentage by 100. Percentage outputs multiply the final ratio by 100. Calculations retain precision internally; displayed amounts and rates are rounded to two decimals.
Variables and input definitions
- Rentable area (sq ft)
- Rentable area under lease. Minimum: 1.
- Base rent (USD/sq ft/year)
- Annual base rent per rentable square foot. Minimum: 0.
- CAM (USD/sq ft/year)
- Common-area maintenance pass-through. Minimum: 0.
- Property tax pass-through (USD/sq ft/year)
- Tenant tax pass-through assumption. Minimum: 0.
- Insurance pass-through (USD/sq ft/year)
- Tenant insurance pass-through assumption. Minimum: 0.
- Other pass-throughs (USD/sq ft/year)
- Other occupancy costs. Minimum: 0.
Worked example
This example uses the exact prefilled inputs above. Reset defaults to restore this scenario after making changes.
| Item | Default scenario |
|---|---|
| Rentable area | 5,000 |
| Base rent | $30.00 |
| CAM | $8.00 |
| Property tax pass-through | $5.00 |
| Insurance pass-through | $2.00 |
| Other pass-throughs | $0.00 |
| Item | Default scenario |
|---|---|
| Annual base rent | $150,000.00 |
| Annual pass-throughs | $75,000.00 |
| Annual total occupancy cost | $225,000.00 |
| Monthly total occupancy cost | $18,750.00 |
Assumptions and limitations
Lease definitions of rentable area, CAM, exclusions, caps and reconciliations vary by contract.
Results describe this input scenario; they are not a recommendation.
The tool uses values you supply. It does not retrieve market prices, verify leases or inspect a property. Results exclude items outside the listed inputs. Review local requirements and the relevant contract when a payment, fee or allocation depends on them.
Common mistakes
Confirm whether quoted rent is annual or monthly per square foot. This tool uses annual rates and the same entered rentable area for all components.
Sources and method references
These references provide context for the method and terminology. They do not endorse this tool or validate your property assumptions.
- Office of the Comptroller of the Currency — Comptroller's Handbook — Commercial Real Estate LendingNOI, direct capitalization, cap-rate valuation and DCF concepts for commercial real estate.
Frequently asked questions
Does monthly total represent an invoice?
It is an annual cost divided by 12. Actual invoices and reconciliations may follow a different payment schedule.
Are utilities automatically included?
No. Add relevant amounts to the appropriate input assumption. Only the components entered are included.