Glossary / Lease terms and deal stages
Also known as: Minimum rent, fixed rent
Base rent is the fixed rent a tenant pays under a commercial lease, separate from additional rent such as operating expense pass-throughs, CAM charges, or percentage rent. Many commission agreements calculate the leasing commission on total base rent over the lease term.
The SIOR lease glossary defines base rent as "a set amount used as a minimum rent in a lease with provisions for increasing the rent over the term of the lease." Those increases come from an Escalation clause.
Colliers explains that base rent is separate from operating expense charges, which are "often referred to as 'additional rent'" and can include janitorial service, taxes, insurance, and utilities. In a Triple net lease (NNN) most of those costs sit outside base rent, while in a gross lease they are built into it.
Base rent is often the number your commission is built on. A Grubb & Ellis commission agreement calculated the fee on "Aggregate Base Rentals," defined as the total base rent payable during the initial term, and excluded operating expense increases, free rent, and holdover rent. Other agreements use a broader figure. A CBRE agreement with the State of Michigan used a percentage of "the total rent over the term of the Lease" and counted only the first 10 years of longer leases.
Which definition applies to you depends on your commission agreement, so the same lease can produce different commissions under different agreements.
Confirm whether your commission base is base rent only, or total rent including pass-throughs, before you quote yourself a number.
For example, on a hypothetical 5-year lease of 8,000 square feet at $25 per square foot base rent plus an estimated $10 per square foot in operating expenses, total base rent is $1,000,000 (8,000 x $25 x 5). Base rent plus expenses is $1,400,000. At a hypothetical 4% rate, the commission is $40,000 on base rent only, or $56,000 if expenses were included.
