Calculate net effective rent from free months and rent credits, find the concession needed for a target rent, or compare two lease offers with fees.

Fractional months are allowed; use the concession stated in the lease.

One-time credit and monthly fees

Rent Concession Formula

RC = AR - NER

Variables:

  • RC is total base-rent concession over the same stated period ($)
  • AR is gross base rent for that period ($); for a 12-month example, the annual total
  • NER in this subtraction is net base-rent cost for the same period ($), not a monthly average

Subtract net base-rent cost from gross base rent for the same period. For monthly face rent R, lease term L, free months F and one-time rent credit K: total concession = R × F + K; monthly effective base rent = [R × (L − F) − K] / L. Add recurring monthly fees separately; this average may differ from actual monthly payments.

How to Calculate Rent Concession?

The following steps outline how to calculate the Rent Concession.

  1. First, determine gross base rent for the lease term: monthly face rent × months.
  2. Next, determine the free-month rent credit and any one-time rent credit; enter monthly fees separately.
  3. Use RC = gross term base rent − net term base rent. To solve a target monthly base rent T, free months = [R × L − K − T × L] / R.
  4. Calculate the total concession and divide net base-rent cost by the lease term to find its monthly average.
  5. After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem : 

Use the following variables as an example problem to test your knowledge.

Gross base rent for a 12-month lease = $24,000 ($2,000 per month).

Net base-rent cost for that same 12-month lease = $20,000. Total concession = $24,000 − $20,000 = $4,000; monthly effective base rent = $20,000 / 12 = $1,666.67. Two free months at $2,000, or a $4,000 one-time rent credit, produces this example before fees. A zero target base rent requires all base rent to be waived; recurring fees can still be payable. Offer comparisons use each lease’s own term, so unequal-term totals are not common-horizon savings. Amounts are shown in dollars; the arithmetic is the same in any single currency.