CALCULATION GUIDE
How to Calculate Effective Commercial Rent
Translate incentives and free rent into a comparable annual rent figure.
Calculation approach
Calculate total face rent over the lease term, then subtract free rent, landlord allowances and other incentives. Divide the net amount by rentable area and lease years.
How to use the result
Effective rent is useful for comparison, but it does not replace a year-by-year cash-flow schedule when escalation or timing is material.