5 Numbers Every Tenant Should Calculate Before Signing a Commercial Lease — And How Most Get Them Wrong
Most tenants focus on one number when reviewing a commercial lease: the rent.
It's understandable. It's the headline figure. It's what gets negotiated first and quoted most. But it's also the least useful number for understanding what you're actually committing to.
Here are the five figures that matter — and why most tenants either don't calculate them or get them wrong.
1. Net Effective Rent
This is the real cost of your lease, averaged across the full term after accounting for all incentives — rent-free periods, stepped rent, fit-out contributions.
The headline rent is what you pay in a normal month. The net effective rent is what you're actually paying on average across the whole term. Landlords and advisors use this figure to benchmark and compare deals. Most tenants don't know what theirs is.
If your landlord is offering three months rent-free on a five-year lease, your net effective rent is lower than the headline — but by exactly how much depends on the structure. Calculate it before you sign.
2. Total Occupancy Cost
Rent is one line item. Your total occupancy cost includes service charges, property tax, utilities, insurance and any other pass-through costs your lease allows the landlord to invoice.
In logistics and industrial leases, total occupancy cost typically runs fifteen to thirty percent above the headline rent. Sometimes more. If you're modelling your cost base on rent alone, you're underestimating your commitment from day one.
3. Indexation Impact Over the Full Term
Most European commercial leases link annual rent increases to HICP — the EU inflation index. In a normal year, this adds two to three percent. In 2022, it added nine point two percent.
That compounding effect over a ten-year lease is significant. A rent of €100,000 in year one, indexed at three percent annually, becomes €134,000 by year ten — with total payments over the term of approximately €1.14 million, not €1 million.
If your lease has no cap on indexation, model the pessimistic scenario before you sign — not when the first annual increase lands.
4. Deposit Exposure
Most tenants know they need to pay a deposit. Fewer know exactly how much — or when.
A standard deposit of three to six months' rent plus service charges plus VAT can be a substantial sum. In built-to-suit deals, the landlord typically requires the deposit or bank guarantee within a defined number of days from signing — before the space even exists.
Calculate the full deposit amount, confirm the payment deadline, and make sure your cash flow can absorb it. This is not a figure to discover at the point of handover.
5. Early Termination Penalty
If your circumstances change and you need to exit outside a valid break clause, what does it cost?
In many European leases, the standard answer is: rent until the end of the term or the next break option. In a tailored or built-to-suit deal, that can run to years of rent.
Some leases allow you to limit this by negotiating a capped penalty tied to the landlord's reletting costs. Most tenants don't negotiate this because they don't think they'll ever need it. They're usually wrong.
Knowing these five numbers doesn't require a legal degree. It requires reading the right clauses and doing the right calculations before you sign — not after.
The ClarePoint Lease Toolkit calculates all five for your specific lease terms: a ten-year occupancy cost model with three indexation scenarios, a break clause and penalty simulator, and a lease register that tracks every critical date automatically. Download the Toolkit →
If you'd prefer to have a Chartered Surveyor review your draft lease and walk you through the numbers, get in touch →
