Why Isn't Base Rent the Number the Tenant Actually Pays?
Base rent is the smallest number in the conversation. It excludes CAM, property taxes and building insurance, which together often add 20% to 30% on top.
One small food operator quotes his rent as $3,200 a month. The check he writes is just over $4,000 — roughly a quarter more than the number everyone repeats back to him.
Why the difference matters for the ratio
Run occupancy cost on base rent alone and you understate the tenant by nearly two full points.
For that operator, base rent against roughly $600,000 in annual sales reads about 6.4%. The actual check reads about 8.1%. One number sits comfortably inside the healthy band. The other sits at its edge. Same business, same lease, different arithmetic.
The rest of the monthly nut
Rent is not the end of what is fixed. That same operator owes, every month, before buying a single ingredient or paying a single employee:
Rent, gross: about $4,000
Electric: about $2,000
Gas: about $500
Workers comp: about $300
Insurance: about $100
Internet and phone: just under $100
Roughly $7,000 a month, on a business doing $40,000 to $60,000. Around 14% of sales committed before anything variable happens.
The bill nobody asks about
Utilities at that shop run more than half the rent check.
Refrigeration and cooking equipment run all day. In small food formats, electric and gas together can reach 5% of sales, which is more than some tenants pay in base rent per square foot. And unlike rent, the tenant cannot negotiate it.
That makes electrical service capacity and HVAC tonnage leasing questions, not tenant problems. A space delivered with undersized service hands the tenant a permanent operating cost they did not price.
What to do with this
When a tenant tells you what they pay, ask whether that is base or gross. When you quote, quote both.
Know the fixed monthly number for any tenant you are negotiating with. Once you know what is committed before the doors open, you know exactly how much room exists — and whether the $200 a month you are asking for is a rounding error or the whole margin.
Creative Deal-Making covers whole occupancy cost, what belongs in it, and how to structure around a tenant's real monthly number.