You are comparing two, 5-year, NNN lease options for your office building:

Option 1 - base rent will be $24.00psf, per year increasing annually by 3%. Operating expenses are $9.00psf, per year increasing by 3% annually. The tenant will pay their share of operating expenses. The tenant wants two private offices built requiring tenant improvements totaling $20psf, which you will spend before the lease starts. You will also pay $10psf in lease commissions in year -0-.

Option 2 - The same as Option 1, except to save on your upfront cash costs you offer the tenant a base rent starting at $20.00psf, but no tenant improvements.

What is the effective rent for each option?

Answer rating: 100% (QA)

To calculate the effective rent for each option we need to take into account the base rent operating ... View the full answer