Finance category
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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.
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 Net Effective Rent Calculator is built to give a quick, browser-based estimate for net effective rent. 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. 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 net effective rent 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 net effective rent 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 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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