In real estate—whether you’re a tenant hunting for office space in New York City or a landlord setting rates in Los Angeles—knowing how to calculate rent per square foot (PSF) is essential. Think of it as the “miles per gallon” of property costs. It gives you a fair way to compare different buildings, no matter the size. I’ve used this formula myself when looking at both residential rentals and commercial leases, and it’s saved me from making costly mistakes.
In this guide, I’ll break down the formula, explain usable vs rentable square footage, cover lease types like triple net and gross leases, and share real-world examples.
What Is Rent Per Square Foot and Why Does It Matter?
Rent per square foot (PSF) is the total rent divided by the size of the space in square feet. It’s the go-to metric in commercial real estate and a handy tool in residential rentals, too.
Why does it matter? Imagine comparing a 1,000-square-foot office in Manhattan at $25 per square foot per year with a 2,500-square-foot retail space in Chicago at $30 PSF. Without this calculation, the total numbers can be misleading.
It’s the same logic whether you’re evaluating an apartment in San Francisco, a warehouse lease in Houston, or a retail store in Miami—rent PSF makes the comparison simple and transparent.
The Rent Per Square Foot Formula
Here’s the simple formula most brokers, landlords, and property managers use:
Rent PSF = Total Rent ÷ Total Square Footage
Two common scenarios:
- Finding PSF from Total Rent
- Example: A 2,000 sq ft office costs $50,000 annually.
- $50,000 ÷ 2,000 = $25 PSF.
- Finding Total Rent from PSF
- Example: Quoted $32 PSF for 3,000 sq ft.
- $32 × 3,000 = $96,000 annually.
- Divide by 12 = $8,000 per month.
Pro tip: Always confirm if rates are quoted annually ($/SF/YR) or monthly ($/SF/MO). Practices vary by region—Nashville often uses annual, while parts of California prefer monthly.
Usable vs. Rentable Square Footage
This is where people get tripped up. Landlords may advertise rentable square footage (RSF) instead of usable square footage (USF).
- USF (Usable Square Footage): Space you actually occupy (your office, store, or apartment).
- RSF (Rentable Square Footage): USF plus a share of common areas like lobbies, hallways, and restrooms.
Formula: RSF = USF × (1 + Load Factor)
Example:
- USF = 3,000 sq ft
- Load Factor = 16.7%
- RSF = 3,000 × 1.167 = 3,501 sq ft
- At $32 PSF → $112,032 annually instead of $96,000
Offices usually use RSF. Retail spaces stick to USF. Always ask which one your lease uses.
Lease Structures That Impact Rent PSF
The type of lease determines what’s included in your rent.
- Triple Net Lease (NNN): Base rent + taxes, insurance, and maintenance. (Example: $20 PSF + $10 expenses = $30 effective PSF).
- Full Service Gross Lease (FSG): One all-inclusive number. Landlord covers everything (e.g., $35 PSF).
- Modified Gross Lease (MG): Hybrid. Base rent covers most costs; the tenant handles specifics like utilities or cleaning.
These terms come up a lot in office leases with companies like CBRE, JLL, and Cushman & Wakefield.
Real-World Rent Per Square Foot Examples
- Commercial Office (Manhattan):
2,000 sq ft office at $25 PSF (RSF). Total rent = $50,000/year or $4,167/month. Add $5 PSF for NNN = $60,000/year. - Retail Store (Chicago):
1,500 sq ft shop at $15 PSF. Total rent = $22,500/year or $1,875/month. - Residential Apartment (Los Angeles):
$2,000 monthly rent for 1,000 sq ft. Rent PSF = $24 annually ($2,000 × 12 ÷ 1,000).
Factors That Influence Rent PSF
When calculating, don’t just look at the formula. Consider:
- Location: A prime office in Midtown Manhattan costs far more PSF than suburban New Jersey.
- Market Trends: National commercial averages range $20–$40 PSF, but San Francisco and Boston often exceed that.
- Additional Costs: Utilities, parking, and CAM (common area maintenance) can increase your effective rent.
- Negotiation Power: Brokers and tenants use PSF as leverage in deals.
Final Thoughts
Mastering rent per square foot makes you a smarter tenant, buyer, or landlord. It levels the field, helps you compare spaces from New York City offices to Houston warehouses, and prevents surprises in your lease. Use the formula, check whether it’s USF or RSF, and always clarify the lease structure.
If you’re entering a major deal, consult a licensed real estate broker or property manager—but with this guide, you’ll already speak their language.
FAQs
To calculate the cost per square foot, you divide the total price by the total square footage. For example, a 1,000 square foot apartment that costs $1,500 has a per-square-foot price of $1.50.
The cost of a 300 square foot room changes a lot. It depends on the city. It also depends on the quality of the room. You can find the cost by multiplying the room size by the price per square foot.
You measure the rentable area by finding the usable space in a building. This is the space a tenant can use. Then, you add a share of the common areas. Common areas include lobbies and hallways.
Yes, stairs are often part of the rentable area. They are part of the common space. The cost of this space is often shared among all tenants.
Rentable square footage is the total space a tenant pays for. It includes their private office. It also includes their share of common building areas. This is why a space may be bigger on paper than it seems.
To find the rent, you multiply the total square footage by the price per square foot. For example, 1,000 square feet at $2.00 per foot is $2,000. This is your monthly rent.
To calculate this, you take your monthly rent. You divide it by the total square footage of your space. This gives you the cost for each square foot.
A rentable square foot calculator uses a special formula. It adds the private space and the common area. You can find these tools online. They help people find their true rental space size.
Annual = $/SF/YR (standard in commercial real estate). Monthly = annual ÷ 12.
Same idea: Purchase Price ÷ Square Footage. Handy for comparing home prices in Miami vs Austin.
No. Offices use RSF, retail uses USF, and industrial leases may also factor in ceiling height.
Absolutely. It’s a smart way to compare apartments or condos in the same building.
Co-Founder, Owner, and CEO of MaxCalculatorPro.
Ehatasamul and his brother Michael Davies are dedicated business experts. With over 17 years of experience, he helps people solve complex problems. He began his career as a financial analyst. He learned the value of quick, accurate calculations.
Ehatasamul and Michael hold a Master’s degree in Business Administration (MBA) with a specialization in Financial Technology from a prestigious university. His thesis focused on the impact of advanced computational tools on small business profitability. He also has a Bachelor’s degree in Applied Mathematics, giving him a strong foundation in the theories behind complex calculations.
Ehatasamul and Michael’s career is marked by significant roles. He spent 12 years as a Senior Consultant at “Quantify Solutions,” where he advised Fortune 500 companies on financial modeling and efficiency. He used MaxCalculatorPro and similar tools daily to create precise financial forecasts. Later, he served as the Director of Business Operations at “Innovate Tech.” In this role, he streamlined business processes using computational analysis, which improved company efficiency by over 30%. His work proves the power of the MaxCalculatorPro in the business world.
Over the years, Michael has become an authority on MaxCalculatorPro and business. He understands how technology can drive growth. His work focuses on making smart tools easy to use. Michael believes everyone should have access to great calculators. He writes guides that are simple to read. His goal is to share his knowledge with everyone. His advice is always practical and easy to follow.