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Net Effective Rent Calculator
Net Effective Rent (NER) backs out free rent, TI allowance, and leasing commission from total contract rent — delivering the true economic rent per SF per year. NER is the only fair comparison across competing lease deals with different concession packages, and the metric most lenders and appraisers underwrite for stabilized cap rate.
Of total rent
Net effective rent / SF / yr
$23.13
Total contract rent / SF
$245
Free rent value / SF
$16
TI / SF
$55
Leasing commission / SF
$12
How the math works
Net Effective Rent (NER) backs out free rent, TI, and leasing commission from the total contract rent — giving the true economics on a per-year per-SF basis. NER is the apples-to-apples comparison metric across deals with different concession structures.
$32/SF asking with 6 months free, $55 TI, and 5% LC over 84 months at 3% bumps yields a NER around $26-28/SF — a ~15% discount to face rent.
How to Use
- Enter asking rent/SF, lease term in months, and free rent months.
- Enter TI/SF, leasing commission %, and annual step-up %.
- Read NER per SF per year and the breakdown of concessions.
Frequently Asked Questions
Straight-line vs IRR NER?
Straight-line averages all rent and concessions across the term. IRR-based NER discounts cash flows. Most brokers use straight-line; institutional underwriters use both.
How big is the NER discount typically?
Office can be 15-25% below face in soft markets due to concessions. Industrial usually 5-10%. Multifamily 5-15% with concessions.
Does NER include opex pass-through?
No — NER is base rent only. Add opex pass-through separately if you want all-in occupancy cost.
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