Work out net effective rent instantly with clear inputs, formula shown and shareable results.
Net effective rent is the level rent whose present value equals the present value of the actual cash flow. Each month of face rent after the free period is discounted, and the total is divided by the annuity factor for the term. Unlike a simple average it accounts for the time value of the concession, which is why leasing teams use it to compare unequal deals.
Net effective rent
NER = NPV of actual rent / annuity factor for the term
Monthly discount rate
r = (1 + annual rate)^(1/12) - 1
NER = NPV of actual rent / annuity factor for the term. Net effective rent is the level rent whose present value equals the present value of the actual cash flow.
A higher rate makes an early concession relatively cheaper for the landlord, so it raises the net effective rent. Comparing deals requires the same rate applied to both.
This calculator takes 4 inputs: Face rent, Lease term, Rent free months, Annual discount rate. The pre-filled defaults are a realistic worked example — replace them with your own site or project figures.