Net Effective Rent Calculator

Calculate true net effective rent with concessions, tenant improvements, and lease incentives. Comprehensive commercial and residential lease analysis tool.

Basic Lease Terms

Property Size (sq ft) Base Rent ($/month or $/sq ft/year) Rent Type Lease Term (months) Discount Rate (%) For present value calculations (annual rate)

Free Rent & Concessions

Free Rent Months Total months of free rent during lease term Free Rent Timing Tenant Improvement Allowance ($/sq ft) Landlord contribution for improvements Moving Allowance ($) Commission Credit ($) Broker commission credit to tenant Other Concessions ($) Legal fees, security deposit reduction, etc.

Rent Escalations

Annual Rent Increase (%) Annual percentage increase (0 for flat rent) Escalation Start Month Month when first increase takes effect

Operating Expenses (if applicable)

Operating Expenses ($/sq ft/year) CAM, taxes, insurance, utilities Operating Expense Escalation (%/year) Expense Stop ($/sq ft/year) Landlord pays up to this amount

Additional Costs

Security Deposit (months of rent) Initial Tenant Improvements ($/sq ft) Tenant-funded improvements beyond allowance Percentage Rent Threshold ($/sq ft/year) Sales threshold for percentage rent (retail) Percentage Rent Rate (%) Percentage of sales above threshold

Enter lease details and calculate net effective rent.

How it works

Net Effective Rent calculates the true average rent after accounting for all concessions, free rent periods, tenant improvements, and escalations. It uses present value analysis to provide accurate lease cost comparisons.

Key Features

Present Value Analysis: Accounts for time value of money
Comprehensive Concessions: Free rent, TI allowances, credits
Escalation Modeling: Annual rent increases and operating expense growth
Multiple Rent Structures: Total monthly, per sq ft annual/monthly
Operating Expense Analysis: Expense stops and escalations

Example

5,000 sq ft at $25/sq ft with 3 months free rent and $10/sq ft TI allowance over 5 years = $23.12/sq ft net effective rent (vs. $25/sq ft face rate).

FAQ

What is net effective rent and why is it important?

Net effective rent is the true average rent after accounting for all concessions, free rent periods, and landlord contributions. It's crucial for accurate lease comparisons because face rents don't reflect the actual cost. For example, a lease at $30/sq ft with 6 months free rent may be less expensive than a $25/sq ft lease with no concessions.

How do free rent periods affect the calculation?

Free rent reduces the effective rent by spreading the total rent payments over the entire lease term. The timing matters - upfront free rent has higher present value than backend free rent. The calculator accounts for the time value of money, making upfront concessions more valuable to tenants.

What tenant improvements should I include?

Include all landlord-provided TI allowances as concessions that reduce effective rent. Count tenant-funded improvements beyond the allowance as additional costs. Standard allowances vary by property type: office space typically $20-60/sq ft, retail $10-40/sq ft, industrial $5-15/sq ft.

How do rent escalations impact long-term costs?

Rent escalations compound over time, significantly affecting total lease costs. A 3% annual increase doubles rent in approximately 24 years. The calculator models escalations starting from your specified month and compounds them annually, showing both nominal and present value impacts on your lease.

When should I consider percentage rent in retail leases?

Percentage rent applies when retail sales exceed a specified threshold, typically 4-8 times the base rent. For example, with $25/sq ft base rent, percentage rent might kick in at $100-200/sq ft in sales. This protects landlords in high-performing locations but adds variability to tenant costs based on business performance.