Operating Costs in the Full-Rent Equation

Why a lower rental rate does not always equal the best deal.

In Calgary, we are in a commercial real estate market of high vacancy and low rental rates – truly an occupier’s market – and one that is very well publicized. In this market, occupiers have the ability to negotiate on several different properties that meet both their needs and wants for office space. When all else is equal with respect to a space’s amenities and location, cost ends up being the greatest differentiator. 

When most occupiers think about achieving the lowest cost, they intuitively set their sights on reducing the rental rate. The common thought is, for most, that lower rental rate equals lower cost. However, there is another material component to the full rent equation, and paying attention to it can help an occupier reduce their overall rent obligation. Ignoring this other element could mean that you, the occupier, are not achieving the best deal economics available to you.