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Lease Extension Economics Calculator
Extensions balance tenant retention against market-rent upside.
Extension advantage
$410,000
Re-lease net NPV
$1,790,000
Downtime cost
$360,000
How the math works
Re-lease net NPV = new rent NPV − downtime cost − TI/LC. Extension advantage = renewal NPV − re-lease net NPV.
$2.2M renewal vs $2.5M − $360k downtime − $350k TI/LC = $1.79M. Extension $410k advantage.
EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.
Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.
Learn more about our review process on the EveryCalc methodology page.
How this calculator works
What this page estimates
This Lease Extension Economics Calculator is built to give a quick, browser-based estimate for lease extension economics. Extensions balance tenant retention against market-rent upside. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.
Calculation approach
The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.
Example workflow
For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.
Practical checks
- Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
- Run a low, base, and high case when the inputs are estimates.
- Check the related calculators below when the next decision depends on a different assumption.
How to interpret the lease extension economics result
Best use
Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.
Cross-check
Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.
Watch for
Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.
This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.
Before relying on this lease extension economics estimate
Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.
Confirm source numbers
Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.
Separate cash flow from total cost
A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.
Run conservative cases
Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.
Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.
How to Use
- Enter renewal rent NPV.
- Enter new-tenant rent NPV.
- Enter downtime months.
- Enter TI/LC for new tenant.
- Read extension advantage.
Frequently Asked Questions
Renewal vs re-lease?
Renewal: no downtime, no new TI/LC, known tenant. Re-lease: downtime cost, TI/LC outlay, credit/fit risk. Renewal usually favorable unless market rents 15%+ above current. Institutional owners model each renewal decision individually.
Market rent premium needed?
To beat a renewal, re-lease must overcome: 6-12 months downtime rent loss, $15-50/SF TI allowance, 4-6% leasing commission. Break-even new-tenant rent typically 110-130% of renewal rent for a 5-year term.
Tenant quality?
Existing tenant with good payment history and stable business is worth 10-20% premium over unknown new tenant. Factor credit risk into NPV comparison. Investment-grade tenant renewal worth 5-10% below-market rent.
What documentation matters here?
Written leases, move-in/move-out inspections with photographs, ledger entries showing every payment and charge, served notices with proof of service, and contemporaneous emails or texts. Courts weigh written evidence heavily; informal understandings rarely stand. Institutional operators run a monthly file audit to catch gaps before they matter. Good paper trails recover most of what's owed.
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