Midterm Fair Market Adjustment Calculator

Long-term leases often contain midterm rent reset clauses.

Current rent $/SF

Market rent $/SF

Reset adjustment %

Tenant SF

Years remaining

Total adjustment

$2,450,000

Annual rent increase

$245,000

Reset $/SF

$37.80

How the math works

Reset = market × adjustment %. Annual increase = (reset − current) × SF. Total = annual × years remaining.

$42 × 90% = $37.80 reset. − $28 = $9.80/SF × 25,000 = $245k/yr × 10 yrs = $2.45M total adjustment.

How to Use

Enter current rent per SF.
Enter market rent per SF.
Enter reset adjustment %.
Enter tenant SF.
Enter years remaining.
Read total adjustment.

Frequently Asked Questions

When used?

Ground leases (40-99 year terms) and long commercial leases (20+ years) often reset to fair market rent at specified intervals — typically years 10, 20, 30. Without reset, rent drifts far from market over decades.

Typical structures?

Reset to X% of fair market rent (85-100% common). Adjustment by CPI with FMR floor. Appraiser determines market; baseball-style arbitration if landlord and tenant disagree. Major tenants often negotiate 90% of FMR, not 100%.

Valuation impact?

Property valuations assume rent will reset to market — anticipated adjustment drives long-term NOI projections. Mispricing the reset math produces multi-million-dollar valuation errors. Professional appraisers always model reset mechanics explicitly.