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Lease Termination Option Cost Calculator
Termination options balance tenant flexibility against landlord capital recovery.
Total termination cost
$348,000
Penalty amount
$168,000
TI/LC recovery
$180,000
How the math works
Total = unamortized TI/LC + monthly rent × penalty months.
$28k × 6 = $168k penalty + $180k unamortized = $348k total termination cost.
How to Use
- Enter remaining rent obligation.
- Enter unamortized TI/LC.
- Enter termination fee multiplier.
- Enter penalty months.
- Read total termination cost.
Frequently Asked Questions
Option pricing norms?
Termination fee = unamortized tenant improvements (TI) + unamortized leasing commission (LC) + X months of rent penalty. X typically 4-8 months. Some leases require full TI/LC repayment only; others add penalty rent for cushion.
Notice periods?
Typical: 9-12 months notice before termination date. Short notice (<6 months) costs extra. No-penalty termination after Year 5 of a 10-year lease is common for single-tenant buildings. Every market has conventions; negotiate carefully.
Impact analysis?
Cost should be weighed against tenant flexibility value. If business needs may shift (M&A, growth, shrink), termination option worth 5-10% of lease NPV. Premium negotiated upfront in lease negotiation, paid via higher rent or specific termination fee.
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