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Effective Rent
Effective rent expresses lease rent on a comparable basis after accounting for concessions and scheduled rent increases.
Effective rent expresses lease rent on a comparable basis after accounting for concessions and scheduled rent increases. Calculations vary: some use an average over the lease term, while others discount future payments.
Property operations example: compare lease offers using the same period, area basis, and calculation method. An effective-rent figure alone does not establish cash collected.
Source: NAIOP Research Foundation, Commercial Real Estate Terms and Definitions, 2024, p. 14.
Frequently Asked Questions
Why can two effective-rent calculations differ?
They may include different costs or use different discounting methods. State the calculation basis before comparing the results.
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