Commercial Rent per m²: Finding a Realistic Level

Two office leases in the same town can sit DKK 700 per m² apart without either of them being wrong. One faces the street, is newly refurbished and has a strong tenant on a long contract; the other sits in a third rear courtyard with worn-out installations and a short, terminable agreement. The figure per m² is not a property of the square metre — it is the result of location, condition, lease terms and what the market actually pays for comparable premises right now.

That is why hitting the right rent level in a commercial lease is not an arithmetic exercise but a judgement. Set it too high and you pay for it with vacancy, rent-free periods and deferred income. Set it too low and you give away yield over the entire term of the contract — and potentially lock yourself into a low level for years. Below is the approach an asset manager or commercial agent can use to find the figure and substantiate it, so it holds up before the tenant, management and any later review.

Start with the category: office, retail and warehouse are not priced the same

The first move is to keep the lease types separate. Office, retail and warehouse each follow their own logic, and an average price for “commercial space” in an area therefore tells you essentially nothing.

• Office is driven by micro-location, access to public transport, shared facilities and the flexibility of the space. Prime office in a town centre and secondary office a few hundred metres away can differ markedly.
• Retail is extremely location-sensitive. Here it is footfall, the profile of neighbouring tenants and the visibility of the frontage that carry the rent — two retail units on the same street can have wildly different value depending on corner, entrance and ceiling height.
• Warehouse and logistics is priced more by function: clear height, loading-door arrangements, floor load capacity, truck access and distance to the motorway. Here location in the classic sense matters less than logistical suitability.

Always compare apples with apples. A realistic level is found by identifying the leases that resemble yours in type, size, condition and location — not by pulling an area average.

Freedom under the commercial lease act — and why the market disciplines you anyway

Unlike residential leases, commercial rent rests on freedom of contract. As a starting point, the parties set the rent payable when the agreement is concluded — there is no statutory ceiling, and rent setting in the commercial segment is therefore primarily a matter of negotiation and of what the market will bear.

But that freedom is not unlimited in practice. Set the rent markedly above the market and you will find no tenant. And the commercial lease act allows the rent to be regulated towards market rent later in the relationship if it deviates substantially from the value of the let. This means that the level you set at the outset should be defensible as market-conforming — not just because it is satisfying to be right, but because an unrealistic rent will sooner or later be corrected either by the market or by a regulation.

Rule of thumb: if you cannot substantiate your rent level with three to five comparable premises, you have set a price, not found a market rent.

The specific deadlines, conditions and notice requirements for regulation should always be verified against the current legislation, because they are technical and decisive for whether a regulation holds. For the underlying distinction between what the market pays and what the space is worth internally within the property, it is worth reading about the difference between market rent and the value of the let before you enter a negotiation.

Rent per m² is only half of it — the terms decide the effective rent

One of the most common mistakes is to compare two leases solely on the nominal rent per m². Two office leases can both quote DKK 1,500/m² and still produce very different real income, because the terms pull the effective rent in different directions.

Pay particular attention to:

• Rent-free periods and incentives. A quoted rent of DKK 1,500/m² with six months rent-free over a five-year contract is in reality lower. The effective rent is what counts.
• What is included? Operating costs, taxes, common areas and consumption may be inside the rent or come on top. Always check whether the figure is gross or net.
• The rent-regulation clause. How is the rent adjusted over the course of the contract — by an index, a fixed rate, or towards market rent? This determines income over time.
• Irrevocability and term. A long, irrevocable contract with a solid tenant has a different value from a short, terminable agreement, even at the same rent per m².

When you set your own level, be explicit about which terms the figure rests on — and when you compare with other leases, normalise for the terms before drawing conclusions.

How to substantiate the figure with data

A realistic rent level is built on actual, comparable agreements — not on gut feeling or a landlord’s wished-for level. The approach is the same whether it is office, retail or warehouse:

1. Find comparable premises

Filter by type, size, condition and location within a relevant radius. The closer to your lease in characteristics, the more weight the deal should carry. A warehouse 200 metres away with the same clear height tells you more than an office in the same building.

2. Normalise for differences

Adjust for condition, terms and included costs so the figures are comparable. A space with a higher condition level or better location should pull the level up — but only to the extent the difference is real.

3. Anchor in the property’s own data

Check BBR (the Buildings & Dwellings Register) for areas and use, so you calculate per m² on the right basis, and keep an eye on planning status in Plandata.dk (the national planning portal) if the use can change. A space that can lawfully be used more broadly has a different rental potential than one with a narrow use designation.

The same discipline — find comparable agreements, normalise, document — applies regardless of segment. The general framework for how market rent is set and reviewed in both residential and commercial is described in the article on setting and reviewing market rent for residential and commercial. If you need to set levels across many leases at once, the approach is different — it is covered in estimating market rent at portfolio level.

The expensive mistake: letting a single lease decide the level

The most widespread mistake is to let a single observation — a neighbour’s quoted price or an old deal — set the standard. Quoted prices are the landlord’s wished-for level, not necessarily what was agreed; and a deal from two years ago reflects a market that may have moved.

A robust level rests on several comparable, actual agreements, normalised for terms and condition, where the most recent carry the most weight. That is the documentation that both convinces a tenant in the negotiation and holds up if the rent later has to be tested against the market.

From manual comparison to a figure you can stand behind

Finding a realistic rent level per m² is, at bottom, the exercise we have described: define comparable premises, normalise for condition and terms, and anchor in the property’s own data from BBR, the cadastre (matriklen) and Plandata.dk. That is exactly what Udlejningsvurdering (Rental valuation) in Arcili automates — it finds the comparable active listings and transaction data for your lease, normalises by type and condition, and produces a market-rent estimate per m² that you can substantiate before the tenant, management and any review. Instead of hours in a spreadsheet, you get a figure with the documentation attached.

Want to see how it looks on your own leases? Explore Arcili or book a walkthrough and we will show it on a specific address.