Office Development Break-Even Analysis: $234K Monthly Revenue Target

Fixed costs $28.8K/mo Core fixed overhead

Contribution margin 100% No variable spend

Break-even revenue $28.8K/mo Monthly target

Break-even timing Month 30 Payback point

Break-even calculator

Test whether monthly rent and project income cover variable costs and fixed overhead.

Lean Base Full

Monthly revenue Use the monthly income the portfolio brings in before overhead. $ Low rent High rent Variable expenses Use costs that rise with activity, like deal fees or site-level charges. $ Low costs High costs

Money available to cover fixed costs $125,000 $125,000 revenue - $0 variable expenses

Margin ratio

100%

Covers fixed costs

Yes

Fixed monthly costs Use the monthly overhead that stays in place even when revenue dips. $ Lean overhead Heavy overhead

Break-even chart Revenue Total costs

Which office development expenses are fixed, and which move with leasing volume?

Cost classification

Break-even is only useful if fixed overhead is kept separate from costs that rise with occupancy or site count. In this model, the big trap is treating step-up payroll and rented-site rent like smooth monthly overhead.

Expense	Cost	Break-Even Treatment	Common Mistake
Corporate Office Rent, $12,000/month	Fixed	Include in monthly fixed overhead for the full model period.	Linking it to occupancy even though the source assumption is flat.
Property Insurance, $8,500/month	Fixed	Include as recurring overhead before calculating required rental revenue.	Dropping it below the line or treating it as a one-time closing item.
Legal and Accounting, $5,500/month	Fixed	Include in the fixed monthly base needed to reach break-even.	Mixing recurring professional fees with excluded startup legal and licensing spend.
Technology and Software, $2,800/month	Fixed	Keep in fixed overhead unless the model adds user-based software pricing.	Spreading it across buildings and making break-even look too low early on.
Payroll, $59,000/month in Year 1 to $133,333/month in Year 5	Semi-fixed	Model as staffing steps tied to scale, not as a percent of revenue.	Smoothing headcount growth and missing the cash hit when new roles start.
Utilities and Services, $3,200/month	Semi-variable	Use the base amount, then add usage logic if tenant occupancy drives service load.	Treating all utilities as fixed when occupied buildings can raise usage.
Property Maintenance, $6,500/month	Semi-variable	Keep the base amount, then scale the variable portion with occupied assets if modeled.	Assuming maintenance stays flat as more leased space comes online.
Rented-site carrying costs, $56,000/month when all rented assets are active	Semi-fixed	Add rent in steps as each rented site becomes active, then hold it steady.	Averaging rented-site rent across all months and hiding early cash pressure.

How does break-even change across lean, base, and full office development scenarios?

Scenario table

With zero variable costs, break-even comes down to rent roll versus fixed overhead. The lean case misses cover, while the base and full cases stay positive but leave less room if staffing or site costs rise.

Scenario figures are planning assumptions, not guaranteed results.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean lease-up case	$125,000	$0	$196,333	100%	($71,333)	Below break-even; fixed costs outrun rent.
Base case	$282,000	$0	$212,833	100%	$69,167	Above break-even; about $69k monthly cushion.
Full ramp case	$282,000	$0	$233,833	100%	$48,167	Still above break-even, but cushion tightens.

What breaks the break-even plan for this office development?

Stress test

The plan is tight: base revenue covers overhead by only $48,167 a month. Delayed leasing, rent concessions, higher insurance or utilities, or payroll added before occupancy can flip that cushion into a monthly gap fast.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$282,000	$48,167 cushion	Base revenue clears overhead, but the cushion is thin.
Revenue shortfall	Revenue falls 20% to $225,600.	$225,600	$8,233 gap	A 20% lease-up miss turns into a monthly gap.
Fixed-cost pressure	Fixed costs rise 10% to $257,216.	$282,000	$24,784 cushion	Higher insurance, utilities, or payroll eat the cushion.
Margin pressure	Variable expenses hit 10% of revenue.	$282,000	$19,967 cushion	Fee drag or concessions cut cash fast.
Combined pressure	Revenue falls 15%, variable expenses hit 10%, and fixed costs rise 10%.	$239,700	$41,486 gap	The project stops covering overhead under a bad lease-up and cost spike.

What should you verify before committing to an office development site?

Founder checklist

Commit only when site control, tenant demand, and funding line up with the model. Break-even lands in Month 30, but the cash trough hits $18.801M in Month 59, so the $12.0M purchase plan, $5.1M construction budget, and $515K startup capex need separate backing.

1Tenant pipeline$56.0K/mo

Verify signed or highly probable tenants can carry the $56,000 monthly rented-site load before you lock more space, because weak lease-up makes the break-even date slip.

2Site controlMonth 3-21

Confirm each acquisition or lease is controlled before its Month 3, Month 6, and later start, so you are not funding predevelopment on assets you don't yet hold.

3Bid discipline$5.1M budget

Tie contractor bids, contingencies, and change orders to the $5.1M construction budget, or overruns will squeeze the path to Month 30 breakeven.

4Capital split$12.0M + $515K

Fund the $12.0M purchase plan separately from the $515K startup capex, so asset buys do not drain working cash.

5Payroll ramp$59K→$133.3K/mo

Keep hiring in step with payroll rising from about $59,000 per month in Year 1 to $133,333 per month by Year 5, since fixed labor sets the burn rate.

6Cash reserve$18.8M trough

Hold a reserve that can absorb the $18.801M minimum cash trough in Month 59, and delay noncritical marketing, equipment, or platform spend if lease-up slips.