A landlord’s headline base rent can look higher than what a tenant is actually paying, once free rent months and a tenant improvement allowance are spread across the full lease term.
How it works
Multiplying monthly base rent by the paying months (lease term minus free rent months) gives total rent actually paid; subtracting any other one-time concessions like a TI allowance and dividing by the full lease term gives the true average monthly cost.
What this does not include
This does not include rent escalations during the lease term (this site’s rent-escalation calculator covers stepped increases), which would need to be layered on top of this concessions-based calculation for a fully accurate multi-year net effective rent figure.
How to use this calculator
- Enter monthly base rent, lease term, free rent months, and any tenant improvement allowance.
Frequently asked questions
Why do landlords offer concessions instead of just lowering the headline rent?
A higher headline rent supports the property’s appraised value and comparable-lease benchmarks better than a lower stated rent would, even though the tenant’s true economic cost is the same either way.
Should tenants compare net effective rent or headline rent between buildings?
Net effective rent — it’s the only apples-to-apples comparison once different buildings offer different concession packages alongside different headline rates.
Does net effective rent affect what a tenant’s monthly payment actually is?
No — the tenant still pays the actual scheduled monthly rent each month (full price after free rent ends); net effective rent is an *analytical* average used for comparison, not the literal payment schedule.
