Glossary / Space and measurement
Also known as: PSF, rent per square foot, rate per square foot
The rent or price stated per square foot of space. Commercial lease rates are commonly quoted as an annual dollar amount per square foot, which is multiplied by the space's square footage to get annual rent.
Rocket Lawyer explains that many commercial leases and listings use annual rent per square foot, giving the example that $12 per square foot on 1,000 square feet works out to $12,000 a year. Rent is then usually paid monthly at one twelfth of the annual amount.
Tyler Cauble gives the formula as square footage times rate per square foot equals annual base rent, then divided by 12 for monthly rent. Cauble notes that some landlords quote monthly instead, particularly in older buildings or short-term retail, and that the lease type (such as NNN or full service gross) changes what the quoted rate covers.
The PSF rate times the Rentable square feet (RSF) gives the base rent, and if your commission is calculated on rent, the PSF rate is one of its main inputs. Misreading a monthly quote as annual, or comparing an NNN rate against a gross rate, leads to the wrong rent and a wrong commission estimate.
For tenant rep brokers, comparing PSF rates only makes sense on the same lease type and the same measurement basis. For landlord rep brokers, a clear quote reduces back-and-forth that can slow a deal.
Always confirm whether a PSF quote is annual or monthly, and on which lease type, before you build a commission estimate.
For example, a hypothetical 4,000 RSF space quoted at $30 per square foot per year rents for $120,000 a year, or $10,000 a month. The same space quoted at $2.50 per square foot per month comes to $30 a year per square foot, so the two quotes describe the same rent.
