Net Effective Rent Calculator
Try Our Free Net Effective Rent Calculator
Use our Net Effective Rent Calculator to convert face rent into net effective rent. Enter lease term, area, rent free months, incentives, outgoings then review the number that actually matters for cash flow and value.
What Is Net Effective Rent
Net effective rent is the annualised rent after incentives and landlord costs are spread over the lease term. Instead of stopping at face rent it recognises rent free periods fitout contributions and any landlord paid outgoings to show what the tenant is effectively paying each year
Net Effective Rent Vs Face Rent
Face rent is the headline dollar per square metre per year that looks clean but ignores incentives. Net effective rent adjusts for incentives and landlord costs so you compare apples with apples across deals locations and asset types
Why Net Effective Rent Matters For Commercial Investors
If you are assessing yield serviceability or value you need more than face rent. Net effective rent shows income that is actually hitting the bank each year. It helps you compare competing offers avoid overpaying for cheap rent with heavy incentives and understand the cash flow that supports debt distributions and asset value
What You Need Before You Calculate
- Lease term in years
- Tenancy area in square metres
- Face rent dollar per square metre per year
- Rent free period in months
- Any cash incentives or fitout contribution
- Any annual outgoings paid by the landlord
- Optional purchase price if you want an indicative yield
How To Use The Calculator
Enter your inputs then review net effective rent per square metre per year along with total incentives and net rent over the term. If you want a discounted NER that accounts for escalations and a discount rate contact us and we will run a tailored scenario
Example Calculation
Use this example to sanity check your numbers in the form. These match our internal working:
| Item | Value |
|---|---|
| Inputs | 5 year term, 1,000 sqm, $230 per sqm per year face rent, 3 months rent free, $100,000 fitout, $25,000 other incentive, $20,000 annual landlord outgoings, $3,300,000 purchase price |
| Annual face rent | $230,000 |
| Total incentives | $182,500 |
| Net rent over term | $867,500 |
| Net effective annual rent | $173,500 |
| Net effective rent | $173.50 per sqm per year |
| Indicative effective yield | 5.26% |
Try The Net Effective Rent Calculator
Run your scenario below to give you an idea of the true annual cost of a lease after incentives and landlord costs.
Note: This calculator shows simple net effective rent without escalation or discounting. Most importantly, this calculator is for educative purposes only. It is not to be relied upon for any investment decision whatsoever. Speak to your accountant or financial advisor before making any major financial decisions.