A broker sends you a flyer. It says $18.00 per square foot. You have 10,000 feet in mind, so you do the arithmetic in your head. $180,000 a year, $15,000 a month. That number becomes the anchor for every conversation that follows, including the one with your bank.
It is almost never what you end up paying. Not because anybody lied to you, but because the quoted rate is one line of a bill that has five or six lines, and the other lines are not on the flyer. I am going to walk the whole stack, in the order it hits you, and show you where each piece is negotiable and where it is not.
I am not going to quote you a market rent. Rents move, they vary block to block, and a number I published in September would be stale by spring. You will get a real one from a real space. What I can give you is every layer that gets added to it, so that when a rate lands in front of you, you can build the actual number yourself in about ten minutes.
Layer one: the base rent, and what "plus" is doing
Read the lease type before the number. "$18.00 NNN" and "$18.00 full service" are not comparable quantities. The first is a fraction of what you will pay; the second is close to all of it. I have watched tenants compare a gross quote against a triple-net quote side by side and conclude the triple-net building was cheaper. It was not. It was quoted differently.
Then find the escalation. Three percent annually is common. On a seven-year term, three percent compounding turns an $18.00 starting rate into $21.49 by year seven, and your year-one arithmetic understates the average across the term by about nine and a half percent. If you are modelling the lease, model the whole term, not year one.
The other thing hiding here is how the square footage was measured. Rentable footage includes a share of the common areas through a load factor, so 10,000 rentable feet on a multi-tenant floor might be 8,600 feet you can actually put furniture in. You pay rent on the 10,000. Ask what standard was used and what the load factor is — in writing, before you are emotionally committed to the space.
Layer two: the operating expenses you are inheriting
In a triple-net structure you pay your proportionate share of property taxes, building insurance, and common area maintenance on top of base rent. I have written about how NNN actually works in more detail, but for costing purposes there are three questions that matter.
First: what were these charges last year, actually, in dollars? Not an estimate. The reconciled figure. Ask for two or three years of history. A landlord who will not produce it is telling you something.
Second: what is in the definition? "Common area maintenance" is whatever the lease says it is. In South Florida I look hard at whether roof replacement, parking lot resurfacing, and structural repair have been quietly folded into a category that is supposed to cover landscaping and lighting. Those are capital items. They belong to the owner. Getting them excluded, or at minimum amortized over their useful life rather than expensed in the year they happen, is a normal ask and it is worth real money.
Third: insurance. This is Florida. Property insurance has moved more than any other line item in the operating budget over the past several years, and if your lease passes it through uncapped you are exposed to a number nobody can forecast. A cap on controllable expenses is standard; insurance and taxes usually sit outside the cap. Knowing that going in is better than discovering it in a reconciliation letter.
Layer three: the utilities nobody quotes
In a full-service lease, electric is usually in the number. In triple-net it usually is not, and in flex or industrial space it almost never is. Air conditioning a South Florida warehouse office, or running compressors, or cooling a server room, is a real monthly cost that appears in none of the marketing material.
Ask the landlord for the prior tenant's usage if the space is separately metered. If it is not separately metered, find out how it is allocated — a pro-rata split by square footage can be badly unfair to a low-consumption tenant sharing a building with a high-consumption one.
Layer four: the improvements you are financing without being told
This is the layer that surprises people most, and it is the one where the South Florida building stock makes things concrete.
Across the three counties, the commercial buildings in the 5,000–25,000 square foot range are old. From county records: industrial has a median year built of 1976 and is 75.5% pre-1990. Retail: median 1974, 69.4% pre-1990. Office: median 1982, 68.0% pre-1990. Only 3.4% of that industrial stock, and 7.4% of the office, has gone up since 2010.
A building from 1976 that has not been renovated will need work to suit almost any modern tenant — electrical capacity, HVAC, restrooms that meet current accessibility requirements, lighting, sometimes sprinklers. Someone is paying for that. The question is who, and how it shows up.
When a landlord offers a tenant improvement allowance, part of it is frequently amortized back into your rent over the term with interest attached. That is not inherently bad, since it is financing and financing has a price, but you need to see it. A rate that looks generous can be carrying an eight or ten percent effective interest charge on the build-out. I have gone into what to ask for in the TI allowance guide; the short version for costing purposes is: ask what the rate would be with zero allowance. The gap between that and the quoted rate is the loan you are being offered, and now you can price it against your own cost of capital.
Then there is the work the allowance does not cover. Furniture, cabling, signage, permits, your architect, and the difference between the landlord's building standard and what you actually want. Budget for it as a separate line, because it lands in the first ninety days when you are also paying rent somewhere else.
Layer five: the free rent that is not entirely free
Abated rent is genuinely valuable and I negotiate for it on every deal. Two points on how to count it.
Check whether the abatement covers operating expenses or only base rent. Three months of free base rent in a triple-net building still leaves you paying taxes, insurance and CAM through those months. And check the recapture language — many leases claw back the abated rent if the tenant defaults, which means the concession is contingent rather than banked.
When you compare two deals, convert everything to an effective rate: total dollars paid across the entire term, including escalations, divided by the term and the square footage. A deal with a lower face rate and no abatement often loses to a deal with a higher face rate and four months free. Face rate is a headline. Effective rate is the price.
Putting it together
Here is the frame I use. Fill in your own numbers; the point is which rows exist, not what goes in them.
| Line | Where the number comes from | Negotiable? |
|---|---|---|
| Base rent, year 1 | The quoted rate × rentable SF | Yes |
| Escalation | Model every year of the term, not year 1 | Yes — rate and structure |
| Load factor | Rentable vs usable SF | In effect, through the rate |
| Taxes, insurance, CAM | Last year's reconciled figure, in dollars | The definition is; the amount mostly is not |
| Electric and utilities | Prior tenant usage, or the allocation method | Rarely — but metering is |
| TI amortization | Quoted rate minus the zero-allowance rate | Yes — and it is the biggest lever |
| Your own fit-out costs | Furniture, cabling, signage, permits, design | No, but it is forecastable |
| Abatement | Does it cover opex? Is it recaptured on default? | Yes |
| Security deposit / LOC | Cash out the door on day one | Yes — often more than people try |
Do that once for each building you are considering and the comparison stops being about which flyer had the lowest number.
Why the landlord's basis affects your number
One thing that helps at the negotiating table: knowing roughly what the owner has in the building. Recorded sale prices are public, and the pattern across South Florida is consistent — larger buildings trade at a lower price per square foot. Industrial runs a median $262/SF in the 2,500–5,000 band and $191/SF above 25,000. Office falls from $394/SF in the 5,000–10,000 band to $220/SF above 25,000. Retail from $450/SF to $235/SF across the same span.
An owner who bought at $180 per foot in 2019 and an owner who bought at $340 per foot last year have different arithmetic and different amounts of room. That does not decide the negotiation, but it tells me which pushbacks are likely to be real and which are posture. You can look up what has traded in any of 67 South Florida markets yourself, or start at a county hub.
What I push on first
If I could only fix three things in a lease, in order: the TI structure, because it is usually the largest hidden number and the one landlords have most flexibility on; the operating expense definition, because it is the one that keeps costing you money in years three through seven; and the personal guaranty, because it is the one that follows you if the business does not work. Rent matters. It is just not where the largest dollars usually are.
Every one of these is easier to win eighteen months before your current lease expires than three months before, for a reason that has nothing to do with skill: at eighteen months you can credibly walk, and at three months everyone knows you cannot. That is most of what renewal leverage actually is.
Questions I get asked about this
What does commercial space actually cost per square foot in South Florida?
The quoted rate is only the first line. Depending on the lease structure you may also pay a proportionate share of property taxes, building insurance and common area maintenance, your own electric, and an amortized share of the improvement allowance built back into the rate. Rather than trusting a single figure, convert every deal to an effective rate: all dollars paid across the full term, divided by the term and the square footage.
What is the difference between a gross lease and a triple net lease for budgeting?
A gross or full-service rate is close to your all-in occupancy cost. A triple net rate is base rent only, with taxes, insurance and common area maintenance billed on top, plus utilities in most cases. Comparing a gross quote to a triple net quote without adjusting is the single most common budgeting error I see.
Is a tenant improvement allowance really free?
Often not entirely. A portion is frequently amortized back into the rent over the term with interest, which makes it financing rather than a gift. The way to see it is to ask what the rate would be with no allowance at all — the difference between that and the quoted rate is what the build-out is costing you, and you can then compare it against your own cost of capital.
Why do older buildings cost more to move into?
Because more has to be done to them. In the 5,000–25,000 square foot range across Broward, Miami-Dade and Palm Beach, county records put the median industrial building at 1976 and 75.5% of the stock before 1990; retail sits at a 1974 median and office at 1982. Electrical capacity, HVAC, accessibility-compliant restrooms and lighting frequently need work, and how that cost is split between landlord and tenant is one of the larger numbers in the deal.
How much should I budget beyond the tenant improvement allowance?
Plan for furniture, data cabling, signage, permits, design fees, and the gap between the landlord's building standard and what you actually want. These are your costs regardless of how generous the allowance is, and they land in the first ninety days — usually while you are still paying rent at your current location. Treat it as its own budget line rather than a rounding error.
Should I cap operating expense increases in my lease?
A cap on controllable expenses is a standard and reasonable ask. Taxes and insurance normally sit outside any cap, which matters a great deal in Florida given how property insurance has moved. Also press on the definition itself: roof replacement, parking lot resurfacing and structural repair are capital items and should not sit inside a category meant to cover routine maintenance.
When should I start negotiating a renewal?
Twelve to eighteen months before expiration. The leverage in any lease negotiation comes from having a real alternative, and building one — touring, getting proposals, being genuinely prepared to move — takes months. At ninety days out the landlord knows you cannot move, and the terms reflect that.
