The hidden costs in a commercial lease

1. You pay for more space than you use

Rent is charged on rentable area, which includes your share of lobbies, corridors and washrooms. The load factor is the gap between rentable and usable. A 2,000 sf usable space with a 15% load factor is billed as 2,300 sf. Full explanation in load factor explained.

2. Net rent plus additional rent

Most Vancouver commercial space is quoted net. On top of base rent you pay additional rent: your share of property taxes, building insurance and operating costs (often called CAM, for common area maintenance).

It’s billed monthly on an estimate and reconciled after year end, so there can be a catch-up bill. See what triple net really costs.

3. GST

5% GST applies to commercial rent, base and additional. Easy to forget in a budget.

A worked example

Item	Amount
Usable area	2,000 sf
Load factor 15%, so rentable area	2,300 sf
Base rent $30 /sf/yr	$69,000 /yr
Additional rent $16 /sf/yr	$36,800 /yr
Total before GST	$105,800 /yr
Monthly, before GST	$8,816.67
Monthly, with 5% GST	$9,257.50

The ad said $30 a square foot. The real monthly bill is about $9,260. Run your own numbers in the lease calculator.

4. Escalations

Rent steps, often each year or every few years. Over a five-year lease they add up, so compare offers on the total over the term.

5. Moving in and moving out

• Build-out above the landlord’s allowance, plus permits and design.
• Overlapping rent while you build the new space and finish the old lease.
• Restoration at the end: removing your fixtures or returning the space to its original state.
• Holdover rent if you stay past your lease end without a new deal, often at a premium.
• Utilities, separately metered or billed as part of operating costs.