JB PARCELNNN Lease Calculator
Commercial rent is quoted per square foot per year and the lease structure decides what you actually keep. This runs base rent through escalations, recoveries, and reserves to a value.
How this calculator works
Commercial rent is quoted per square foot per year. A 6,400 square foot building at $24 per square foot is $153,600 a year, or $12,800 a month. That much is simple. What the lease structure does to it is not.
In a true triple net lease, the tenant pays taxes, insurance, and common area maintenance on top of base rent, so your NOI is close to your base rent. In a double net, the tenant covers taxes and insurance but maintenance is split or negotiated. In a full service gross lease, the landlord pays everything, and every dollar of expense growth comes directly out of your income until renewal. The same $24 per square foot means three very different things.
Even in a triple net lease, roof and structure usually stay with the landlord. That is why the structural reserve field exists and why leaving it at zero overstates your NOI. Reserve something, typically twenty to fifty cents per square foot per year depending on the age of the building.
Deal costs are the piece that separates the headline rent from what you actually earn. Free rent, tenant improvement allowance, and leasing commission are all real dollars paid up front against income received over ten years. The effective net rent output spreads them across the term so you can compare two lease proposals honestly. A $26 rent with six months free and $40 of TI can easily be worse than a $23 rent with neither.
Worked example: a Murfreesboro retail building
6,400 square feet at $24 per square foot, ten-year triple net lease, 2.5 percent annual bumps, three months free and $15 per square foot of tenant improvement.
| Year one base rent | $153,600 |
|---|---|
| Year one NOI | $146,752 |
| Value at a 6.75% cap | $2,174,104 |
| Value per square foot | $339.70 |
| Final year base rent | $191,825 |
| Total base rent over 10 years | $1,720,839 |
| Deal costs | $220,442 |
| Effective net rent | $23.44 / sf |
The 2.5 percent escalation is doing real work: by year ten the rent is twenty-five percent higher than year one, and at a constant cap rate that alone adds roughly $566,000 of value. Escalations are the most underrated term in a commercial lease negotiation.
Questions investors ask
What does NNN actually cover?
The three nets are property taxes, building insurance, and common area maintenance, all paid by the tenant on top of base rent. What is not standard is roof and structure, which usually remain the landlord's responsibility unless the lease says otherwise. Read the maintenance and repair section carefully. An absolute net lease pushes even roof and structure to the tenant, and it prices differently for that reason.
How do I compare two lease proposals with different terms?
Use effective net rent. Take total base rent over the term, subtract free rent, tenant improvement allowance, and leasing commission, then divide by square feet and years. A tenant offering $26 per foot with six months free and $40 of TI is frequently worth less than one offering $23 with two months free and $10. The headline rent is a negotiating number, not an economic one.
What cap rate applies to a net lease property?
Tenant credit and remaining lease term drive it more than the building does. Investment grade national tenants with twelve or more years remaining trade at the tightest cap rates. Local operators with three years left trade materially wider, because the buyer is really underwriting the possibility of re-tenanting. Ask a net lease broker for recent comparable sales by tenant credit, not by building type.
Should I model vacancy on a single tenant building?
Most net lease underwriting sets it to zero and prices the risk through the cap rate instead, because the building is either fully leased or fully empty. That is fine for valuation. For your own risk planning, run a separate scenario with twelve months of downtime, re-tenanting TI, and a new leasing commission at expiration, and see whether you can carry it. The holding cost calculator will price the empty period.
What is a good annual escalation?
Two to three percent fixed is common on retail and industrial. Anything below two percent loses ground to inflation over a ten-year term. CPI-based escalations with a floor and a ceiling are used in some markets and protect you better in a high-inflation stretch. The escalation compounds into your exit value, so it is worth more in negotiation than most landlords treat it as.
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Screening a real property? Pull its appraised value, assessed value, acreage, land use, and last recorded sale off the JB PARCEL parcel map and drop the real numbers into this calculator instead of guessing. Coverage runs across every county we carry.