Compare offers on what you actually net

Commercial Real Estate Lease Analysis Software
and the Net Effective Rent Method

Two lease offers on the same suite rarely compare on face rent. Escalations, free months and improvement allowances move the real number. Lease analysis software, or a careful spreadsheet, brings both offers to one figure: net effective rent.

See the two-offer example See SealedFolio's two plans

What goes into a lease analysis

The live SERP for this search is led by MRI, AppFolio's commercial tier and Visual Lease, which handle lease administration and accounting at scale. Lease abstracting, critical dates and tracking after signing are covered in commercial real estate software without the 50-unit minimum.

Worked example: two offers for a 5,000 square foot suite

Diagram comparing two lease offers for a 5,000 square foot suite: offer A at 28 dollars per square foot rising 3% nets 19.86 dollars per square foot per year after concessions, offer B at 26 dollars flat nets 22.57
Two lease offers, net effective rent. Diagram by SealedFolio.
Five-year termOffer AOffer B
Starting rent$28.00/sf, up 3% a year$26.00/sf, flat
Total base rent$743,279$650,000
Free rent4 months, $46,6671 month, $10,833
Tenant improvements$40/sf, $200,000$15/sf, $75,000
Net to landlord$496,612$564,167
Net effective rent$19.86/sf/yr$22.57/sf/yr
  1. Face rent. Offer A looks $2 a foot better and grows 3% a year, so its total base rent is $93,279 higher.
  2. Concessions. A gives away $35,834 more in free rent and $125,000 more in improvements.
  3. Result. Offer B nets $67,555 more over the term, $2.71 per square foot per year, before discounting. Because A's concessions are paid up front, discounting widens the gap.

For what the extra NOI does to value, use the cap rate calculator.

Where SealedFolio fits

SealedFolio does not compare lease offers or compute net effective rent. Once a lease is signed, it records the tenant, unit, start and end dates, monthly rent and deposit, stores the signed lease in the encrypted document vault, tracks rent paid against it on the rent roll and flags the lease on the dashboard as its end date approaches. Stepped rent schedules and CAM reconciliation are not built in. For retail leases with CAM and percentage rent, the commercial page covers what SealedFolio records and what it leaves to a property manager.

Track the lease after you sign it

SealedFolio Pro is $19 a month or $179 a year for up to 3 properties. Portfolio is $39 a month or $297 a year for unlimited properties. Both come with a 30-day money-back guarantee.

See SealedFolio pricing

Commercial real estate lease analysis software: frequently asked questions

What is commercial lease analysis?

Comparing lease offers, or a lease against the market, on what the landlord actually nets: total base rent with escalations, minus free rent, tenant improvement allowances and commissions, spread over the term.

What is net effective rent?

The average rent per square foot per year after concessions. Total rent over the term, less free rent and landlord-paid improvements, divided by square feet and years. A higher face rent can produce a lower net effective rent.

Should net effective rent be discounted?

Professional lease analysis usually discounts each month's cash flow to present value, because concessions are paid up front and rent arrives later. The simple undiscounted version is a good first comparison.

Does SealedFolio analyze lease offers?

No. SealedFolio records the lease once it is signed: tenant, unit, dates, rent, deposit and the lease document itself, and tracks rent paid against it. Use a lease analysis tool or the method on this page to compare offers.