Base Year Reset Cost Calculator

Resetting base year at renewal prevents tenant from free-riding on expense growth.

Tenant SF

Current base year $/SF

Reset base year $/SF

Renewal term years

Total reset cost to tenant

$900,000

Annual cost increase

$90,000

Per-SF increase

$4.50

How the math works

Annual increase = (reset − current) × tenant SF. Total = annual × renewal years.

$14.50 − $10 = $4.50/SF × 20,000 = $90k/yr × 10 yrs = $900k reset cost. Major renewal negotiation point.

How to Use

Enter tenant SF.
Enter current base year expenses per SF.
Enter reset year expenses per SF.
Enter renewal term years.
Read reset cost to tenant.

Frequently Asked Questions

Why reset base year?

At renewal, tenants want to keep the old base year so their pass-through stays low. Landlords push to reset to current-year expenses, restoring full expense growth recovery. This is one of the most contested renewal terms in office leasing.

Typical compromises?

Reset to current year with a small tenant-favorable adjustment ($0.50-2.00/SF offset). Or a 'capped' reset that limits year-one base year increases. Or a phased reset over 2-3 years of the renewal term. Every market has its conventions.

Dollar impact?

On a 20,000 SF tenant with a 10-year renewal, a $5/SF base year increase equals $100k/year × 10 = $1M over the renewal. Worth negotiating carefully — the reset is often the single largest economic term in a renewal.