LANDLORDS & OWNERS · FREE TOOL
Net Effective Rent to Landlord
What a proposed deal is actually worth after free rent, TI, commissions and downtime.
The headline rate and the real number are frequently 20–30% apart. This is the calculation I run live in front of owners when we're weighing two proposals — because the higher face rate is very often the worse deal.
Your numbers
Pre-filled with realistic DFW-market estimates. Change anything — results update as you type.
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NET EFFECTIVE RENT
$16.12/SF/yr
vs. $24.00/SF face rate
Total net income over term
$806,150
Gross rent collected
$1,194,193
Cost to transact
$388,043
TI allowance
$300,000
Leasing commission
$59,710
Free rent given up
$80,000
Carry during downtime
$28,333
Payback on deal costs
29 months
NPV of the lease
$582,735
at 8.0%
Concession drag
32.8%
Average monthly net
$13,436
Term
60 months
Concessions are eating 33% of the face rate. A $24.00/SF deal is really a $16.12/SF deal.
It takes 29 months of rent just to recover your TI, commission and carry — that's a long way into a 60-month term.
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Questions people ask
What is net effective rent?
The rent you actually keep, per SF per year, after free rent, tenant improvements, leasing commissions and the carry cost of downtime. It is almost always well below the face rate.
How do I compare two lease proposals?
Never on face rate. Run each through net effective rent and compare those numbers — a lower face rate with modest concessions routinely beats a higher one with heavy TI and free rent.
Numbers are a starting point.
Thirty years in DFW and Austin means I know which of these assumptions the market will actually support. Send me your scenario and I'll tell you straight.
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