Occupancy cost is the full cost of holding premises: rent plus everything else the tenant pays for the space.
What it includes
Base rent.
Common area maintenance — the tenant's share of maintaining shared parts of a property: parking, landscaping, lighting, cleaning, security.
Property taxes and building insurance, where the lease passes them to the tenant.
Utilities, the tenant's own insurance, cleaning, waste, security, and maintenance of the space itself.
The abbreviation people meet
Charges bundling taxes, insurance and common area maintenance are sometimes quoted together, and the shorthand varies by market. Whatever it is called locally, the point is the same: a rent quoted without it is not the cost.
Reconciliation
Shared charges are usually billed as an estimate through the year and reconciled afterwards against actual spending, producing a further bill or a credit.
Two things are worth knowing. The estimate can be materially wrong, so the reconciliation is a real cash event to plan for. And most leases give the tenant a right to inspect the calculation, which is rarely exercised and sometimes worth doing.
Cost per square foot
Total occupancy cost divided by the area, which is what makes two premises comparable when leases are structured differently — see commercial leases.
Compare like for like on the area measured, since definitions of usable and rentable area differ and a percentage is commonly added for shared space.
Reading it against the business
As a percentage of revenue. There is no universal benchmark across trades, and the useful comparison is against the business's own history and against what the space enables.
For a mobile trade, premises are storage and a base rather than a shopfront, and a high occupancy cost is harder to justify — it is pure overhead, and it raises break-even every month regardless of trading.