What is included in total annual rentals for a commercial property?

Total annual rentals for a commercial property encompasses all sources of rental income that a property generates over the course of a year. This includes not only the base annual rents collected from tenants but also any security deposits if they are considered income or part of the lease agreement.

In many cases, security deposits are intended to be a pre-paid coverage against potential damages and are not typically counted as part of income in standard accounting. However, if a security deposit is treated as an income component due to certain lease conditions or agreements, it can be included in the total rental figures.

By contrast, simply considering monthly rents or supplementing this with only insurance costs provides an incomplete picture of the revenue streams associated with the property. Total annual rentals must reflect a full annual perspective on income, including every feasible aspect that contributes to the property's overall income generation, hence emphasizing both annual rents and security deposits in the calculation.