Onshore field guides · San Francisco & the Peninsula
What Office Space Really Costs in San Francisco: NNN, FSG & TI Explained
Compare the full monthly cost and the cash needed to move in. Convert every rent quote to the same period, identify included services, add separately billed expenses, and account for tenant-funded improvements. FSG, modified gross, and NNN labels are shortcuts; the lease defines who pays.
Onshore · Updated
Normalize the quote before comparing spaces
For an annual rate, monthly base rent equals rentable square feet × annual dollars per square foot ÷ 12. For a monthly rate, multiply the area by the monthly rate. Check that the quoted area belongs to the actual suite, not the whole building or another division.
Regional context: Kidder Mathews reported a $49.10/SF annual full-service-gross asking rate for Financial District Class A/B office in Q2 2026. Its Peninsula office report used $5.50/SF/month FSG. They cover different geographies and categories, and neither is an estimate of industrial rent.
Sources: Kidder Mathews: San Francisco office, Q2 2026Kidder Mathews: Peninsula office, Q2 2026
FSG, modified gross, and NNN
Request the actual expense schedule. Do not add a full NNN budget to an FSG quote if those costs are already included. Conversely, a missing expense estimate is an unresolved input, not a free service. The calculator lets you enter only charges additional to the base quote.
| Quote | Starting interpretation | Ask before comparing |
|---|---|---|
| Full-service gross (FSG) | Specified building services and expenses are included in base rent | What is excluded, and are increases over a base year passed through? |
| Modified gross | Some costs included; others paid separately | Who pays each tax, insurance, maintenance, utility, and service line? |
| Triple net (NNN) | Base rent plus the tenant’s defined expense obligations | What is the current estimate, allocation, reconciliation process, and exclusion list? |
A worked comparison: same floor area, different structures
Illustrative inputs, not listing quotes: consider 3,000 RSF. An FSG quote of $60/SF/year produces $15,000/mo computed base rent. Add $600/mo of excluded services and the modeled monthly operating cost is $15,600 before improvements.
For the same area, a NNN quote of $42/SF/year gives $10,500/mo computed base rent. Assume, only for this example, expenses of $1.20/SF/month ($3,600/mo) and utilities of $600/mo. The modeled result is $14,700/mo before improvements. Replace the assumed expense rate with the landlord’s budget.
Now suppose the NNN option needs $90,000 more tenant-funded work. Spread across 36 months without interest, that is another $2,500/mo of comparison cost. The lower base-rent option then reaches $17,200/mo on that model. Payment timing and financing can change the cash burden further.
Understand the base year
In a base-year structure, the lease can require the tenant to pay its defined share of operating-expense increases above a specified reference year. The formula depends on the expense definition, share, gross-up provisions, exclusions, and any caps. Ask counsel to read those provisions together.
Simple illustration: if the lease measures eligible expenses at $12/SF in the base year and $14/SF in a later year, a 3,000-SF share produces a $6,000 annual increase, or $500/mo computed, before contractual adjustments. That is an example, not a forecast of building expenses.
A public SF lease proposal for 33 8th Street in 2026 separately specified landlord-provided services, tenant electricity reimbursement, and expense increases above a 2027 base year. It illustrates why a headline rent alone does not describe every obligation; it is not an Onshore comparable deal.
TI allowance, build-out budget, and tenant cash
A tenant-improvement allowance is a landlord contribution under agreed terms. It is not the same as a construction estimate. Confirm eligible costs, design responsibility, reimbursement conditions, deadlines, unused allowance treatment, and any amortized amount added to rent.
Cushman & Wakefield’s 2026 office fit-out guide identifies San Francisco at $228/SF in its market comparison. This is published construction-cost context, not a TI allowance, turnkey-suite price, or a bid for your premises. Obtain a scope-specific estimate; a furnished suite needing light changes is a different project from a full fit-out.
A useful budget separates deposit, prepaid rent, design and permit fees, work, IT, furniture, moving, and contingency. Track peak cash before allowance reimbursement as well as the net cost after reimbursement. Deposits tie up cash but are not automatically a spent operating expense.
Compare the whole term
- Record base-rent escalations and the exact months of any free rent. Check whether expenses continue during abatement.
- Model work costs over the same lease term as rent. State the interest assumption instead of treating financing as free.
- Include rent paid before operations begin and any overlap with the old lease.
- Read restoration, repair, renewal, transfer, and guarantee obligations with counsel; they can matter as much as the first year’s rent.
- Compare an existing sublease with a direct lease only after checking remaining term, consent, services, furniture, and exit obligations.
Common questions
Is NNN always cheaper than full-service gross?
No. NNN separates base rent from defined operating expenses. Compare included services, additional charges, improvements, and the full term on the same basis.
How do I convert $/SF/year to monthly rent?
Multiply the annual rate by the suite’s rentable square feet, then divide by 12. For example, 3,000 RSF at $60/SF/year is $15,000/mo computed base rent.
Is a TI allowance cash available at signing?
Only if the work letter says so. Many arrangements reimburse eligible costs after conditions are met. Confirm timing and funding responsibility.
Does free rent mean no occupancy expenses?
Not necessarily. Expense payments and other obligations can continue during base-rent abatement. Check which costs the concession covers.