CRE Math: Calculating Heating & Cooling

CRE Math: Calculating Heating & Cooling

If you have a business in Michigan like I do, your heating bills are much more money in the winter than a business that operates in Arizona. To calculate your heating and cooling costs, you first need to know how much per square foot the landlord is charging.

In Michigan, many office landlords will charge the same amount they have to pay how-ever, more often than not, there is a markup. I see the range anywhere between $1.00/s.f. to $1.50/s.f.


Square Footage: 5,000

Cost to Tenant for Electric: $1.25/s.f.

5,000 s.f. x $1.25/s.f. (electric charge) = $6,250/year

$6,250/year / 12 months = $520.83/month

In an industrial or retail building you be responsible for maintaining the HVAC units. Here is how to calculate this cost:


Square Footage:  15,000

Units to Maintain:  5 units

Annual Cost to HVAC company:  $500 each

5 units’ x 500 = $2,500 annually

Cost/s.f.:  $2,500/10,000 s.f. = 16.6 cents/s.f.



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