PSF (Price Per Square Foot)
Price per square foot (PSF) is the universal metric for comparing commercial lease costs across different properties and markets. It's calculated by dividing the annual rent by the total rentable square footage. In NYC, commercial rents vary dramatically: from $30-$60/SF in emerging Brooklyn neighborhoods to $200-$400+/SF in prime Manhattan corridors like SoHo or Fifth Avenue.
Why It Matters for Operators
PSF allows you to make apples-to-apples comparisons between spaces of different sizes and locations. However, PSF alone doesn't tell the full story—you need to consider loss factor (rentable vs. usable SF), CAM charges, tax escalations, and TI allowances to calculate your true occupancy cost. A $100/SF space with a 25% loss factor effectively costs $133/SF of usable space.
FWDRE Insight
Always ask for the 'effective rent' or 'net effective rent' which factors in free rent periods, TI allowances, and other concessions. A space listed at $120/SF with 3 months free rent on a 10-year lease has a net effective rent of $117/SF. We calculate true occupancy cost for every deal: base rent + CAM + taxes + insurance, divided by usable (not rentable) square footage.
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