Several different factors can influence rental rates, and it is important to have a working knowledge of how rental rates are determined. Here are just a few of the elements that affect rental rates, as seen in the article Understanding Rental Rates:
- The lease term
- Size of the property
- Proximity to other locations
- The current market/economy
Market conditions particularly affect rental rates, which tend to increase. Once you sign your lease, the rate for your lease is fixed for the duration of that term. Since there are so many pieces to a total rental rate and several different ways to quote rents, it can sometimes be hard to understand what people are talking about when discussing leasing rates.
Usually the quoted rate is based on the rent per square foot. These prices are typically on a monthly basis, but in some locations (i.e. San Francisco) they are quoted on an annual basis. The math is simple, but it can be a bit confusing to see one rate quoted as $36.00 per square foot (annual rate) versus $3.00 per square foot (monthly rate). Urban office lease rates are often calculated on an annual basis, while industrial and retail spaces are typically advertised as monthly rates. It is important to be aware of these differences as you compare rental rates for different spaces.