Stair-Step Rent Calculator

Stair-step rent is a fixed-dollar bump each year — $1/SF per year, $500/month per year, etc. Unlike percentage escalations, steps don't compound. This calculator shows total rent, straight-line average (for GAAP), and present value to make apples-to-apples comparison with flat leases.

Year 1 rent (annual)

Annual step ($)

Lease term (years)

Discount rate

Total rent over lease

$1,932,000

Average annual rent (straight-line)

$276,000

PV of rent stream

$1,470,008

Final-year rent

$312,000

Total rent growth %

0.3%

How the math works

Stair-step rent increases by a fixed dollar amount each year — $1/SF, $1,000/month, etc. GAAP requires straight-lining scheduled increases for financial reporting — the calculator returns the straight-line average for comparison.

Underwrite the PV, not the average. PV reflects time-value: a $12K per year step over 7 years is worth meaningfully less than an equivalent flat rent set at the average.

How to Use

Enter year 1 rent and annual step amount.
Enter lease term in years.
Enter discount rate for PV.
Read total rent, straight-line avg, and PV.

Frequently Asked Questions

Stair-step vs percentage?

Stair-step (fixed $ per year) is simpler; percentage (e.g., 3% per year) compounds and grows faster. Industrial and retail often use stair-step; office more often uses percentage escalations.

Why straight-line matters?

GAAP requires landlords to recognize rent on straight-line basis — the difference between straight-line and actual cash creates a 'deferred rent' asset or liability. Cash-basis accounting doesn't use straight-line.

Negotiating the step?

Landlords typically want 2-3% blended increase. Tenants negotiate lower first-year rent in exchange for larger steps. Work the PV both ways before agreeing.