CrunchLease

Net Effective Rent Calculator

Turn a face rate with free rent and TI into the net effective rent you actually pay.

months
SF
$/SF/yr
%/yr
NNN charges usually continue during free-rent periods; model them in the NNN calculator.
months
$/SF
Moving allowance, cash, or other one-time landlord concessions.
$

Effective rent

Net effective rent
$24.35 /SF/yr · $2.03 /SF/mo
Discount to face
18.82%
Total scheduled rent
$796,370
Free-rent value
$37,500
TI + concessions
$150,000
Total collected
$758,870
M1: $0M2: $0M3: $0M4: $12,500M5: $12,500M6: $12,500M7: $12,500M8: $12,500M9: $12,500M10: $12,500M11: $12,500M12: $12,500M13: $12,875M14: $12,875M15: $12,875M16: $12,875M17: $12,875M18: $12,875M19: $12,875M20: $12,875M21: $12,875M22: $12,875M23: $12,875M24: $12,875M25: $13,261M26: $13,261M27: $13,261M28: $13,261M29: $13,261M30: $13,261M31: $13,261M32: $13,261M33: $13,261M34: $13,261M35: $13,261M36: $13,261M37: $13,659M38: $13,659M39: $13,659M40: $13,659M41: $13,659M42: $13,659M43: $13,659M44: $13,659M45: $13,659M46: $13,659M47: $13,659M48: $13,659M49: $14,069M50: $14,069M51: $14,069M52: $14,069M53: $14,069M54: $14,069M55: $14,069M56: $14,069M57: $14,069M58: $14,069M59: $14,069M60: $14,069M1M30M60

Benchmarks reviewed 2026-07-07.

Face rent vs net effective rent

Face rent is the headline rate on a term sheet. Net effective rent (NER) is what you actually pay per square foot per year once free rent, TI, and other concessions are spread across the whole term. A “$30/SF with 3 months free and $30/SF TI” deal isn’t a $30 deal — it’s meaningfully less, and NER is the number that lets you compare offers apples-to-apples.

How free rent and TI change deal economics

Free months abate rent at the start of the term; TI and cash concessions are landlord contributions that offset what you pay. Both pull the effective rate below face:

scheduled(m) = face/12 × sf × (1 + esc/100)^floor((m−1)/12)
collected    = Σ scheduled(m) − free-rent value
NER $/SF/yr  = (collected − TI×sf − concessions) / (term in years) / sf

Straight-line vs NPV effective rent

The straight-line NER simply averages net rent over the term — the convention most brokers quote. The NPV mode discounts future rent to present value and solves the level rent with the same present value, which better reflects the time value of money on long or heavily front-loaded deals. Turn on NPV mode to see both.

Worked example

A 5,000 SF, 60-month lease at $30/SF face escalating 3%/yr, with 3 months free and $30/SF TI, collects $758,870 against $796,370 of scheduled rent. Net of the $150,000 TI, the NER is $24.35/SF/yr — about 18.8% below the face rate. To size the TI side of the deal, use the TI Allowance Calculator; to layer on pass-throughs, the NNN Lease Calculator.

How landlords use NER (and why face rates stay high)

Landlords prefer giving concessions over cutting face rent because face rates set building valuations and comps. A high face rate with free rent protects the headline number while still winning the deal — which is exactly why tenants should compare on NER. Investors capitalizing the income can carry the effective rent into the Cap Rate Calculator.

Frequently asked questions

What is net effective rent?

Net effective rent (NER) is the average rent you actually pay per square foot per year once concessions are spread across the lease term. It nets free rent, TI allowance, and other concessions out of the scheduled rent, then divides by the term. NER is the apples-to-apples number for comparing deals with different concession packages.

How do I calculate NER with free rent?

Total the scheduled rent over the term (including escalations), subtract the value of the free months, subtract TI and any cash concessions, then divide by the number of years and the square footage. This tool runs it month by month so escalations and the free-rent period land in the right places.

Does NER include TI allowance?

Yes — TI allowance is a landlord concession, so it reduces net effective rent. This calculator subtracts total TI (allowance × SF) plus any other concessions from the collected rent before averaging. Note it models base rent only; NNN pass-throughs are separate and usually continue even during free-rent months.

Why do landlords give free rent instead of lower rent?

Face rent drives building valuations, loan sizing, and comparable-lease comps, so landlords protect the headline rate and give concessions instead. A $30/SF face with free rent looks stronger on paper than a $24/SF face, even if the effective economics are similar. That gap is exactly why tenants should compare on NER.

What discount rate should I use?

For the NPV mode, use a rate reflecting your cost of capital or the landlord's — often 6–10%. A higher discount rate lowers the value of future rent, which matters most on long or heavily front-loaded deals. If you're not sure, compare the straight-line NER (discount rate 0) against a couple of NPV scenarios.

Related calculators

TI Allowance & Amortization Calculator Size a TI allowance against buildout cost and amortize the gap into monthly rent. Triple Net (NNN) Lease Calculator Add base rent, taxes, insurance, and CAM to see the true all-in cost of an NNN lease. Cap Rate Calculator Solve cap rate, value, or required NOI, and stress-test value with a sensitivity matrix.