The Rent You're Quoted Is Not the Rent You'll Pay.

Say a landlord quotes you $40 on a 2,400 square foot space you're interested in. Your head does the math: $96K a year, I can make that work. But that $40 is base rent on a triple net (NNN) lease, and the deal doesn't stop there. Add CAM at $8, real estate taxes at $6, insurance at $2, and you're at $56 before you've touched a marketing fund contribution, utilities, or the percentage rent kicker that activates once sales cross a breakpoint. Your actual occupancy cost just landed 40% above your budget.

Here's why that matters more than the dollars: occupancy cost determines the sales your location must produce. If "healthy for your concept" means keeping occupancy under 10% of sales, then that "$96K deal" actually requires nearly $1.4M in annual revenue, not $960K. That gap is where growth plans quietly break, because the site didn't underperform; the underwriting did.

It helps to run the real number all the way through, in dollars instead of per square foot. $56 on 2,400 square feet is $134,400 a year. Per-square-foot pricing (psf or /sf) is the industry's shorthand and is useful for comparing spaces, but it can make obligations feel smaller than they are. $16 of "extras" sounds manageable. $38,400 a year on top of the rent you budgeted sounds like what it is. The founders I've worked with underwrite in annual dollars for exactly that reason.

One more thing worth knowing before your first year in the space: the Common Area Maintenance (CAM), taxes, and insurance charges you pay each month typically aren't the real numbers. They're estimates. The landlord budgets for the year, bills you on a pro rata basis each month, and then reconciles against actual expenses after year-end. That reconciliation statement is where you meet the deal you actually signed, and if the estimates ran light, it arrives with a true-up invoice for the difference (I'll let you guess how often the estimates run heavy in the tenant's favor). This is why audit rights and the right to see the backup behind each charge belong in the lease itself before signing.

The quoted rate has one more quirk: it makes deals with different structures hard to compare. While most restaurant and retail spaces' base rent is negotiated on an NNN basis, a $40 triple-net space and a $52 modified-gross space might be the same real number, or the gross deal might be cheaper, and you typically can't tell from the quotes alone. Work with your brokers to identify comparable transactions with a full deal structure you understand: NNN base rent, CAM, Taxes, Insurance, Delivery Condition, and Tenant Improvement Allowance (TIA).

Before you sign anything, get the full occupancy cost picture in writing: base rent, each NNN line item, caps on controllable CAM, pro-rata calculation (check the denominator), and exactly how the percentage rent breakpoint is calculated. Landlords aren't hiding this, but it's your job, or your development partner's, to pull it forward before the LOI is signed, when you still have leverage, instead of discovering it in your first month of operating or first reconciliation statement.