effective rental rate

effective rental rate

True rent, after taking into account rent concessions; usually expressed as a dollar amount per square foot.Some parts of the country quote rents as dollars per foot per month; others use dollars per foot per year.

Example: If 5,000 square feet of office space normally rents for $20 per foot per year, but the landlord gives 6 months' free rent on a 5-year lease, then the effective rental rate is calculated as follows:

5,000 feet $20 per foot $100,000 per year

6 months free rent $0

4.5 years paid rent @ $100,000 per year $450,000

$450,000 paid rent spread over a 5-year term $90,000 per year effective rent

$90,000 effective rent 5,000 feet $18 per foot effective rental rate

References in periodicals archive ?
On existing portfolio assets, Camden is focused on managing to maximize financial performance through occupancy and effective rental rate growth, coupled with appropriately scoped and timed capital expenditures.
Specifically, if the effective rental rate or per unit cost of capital during the contract period is greater for the entrant than for the incumbent firm, the entrant could not profitably enter.
With these assmuptions established, it is possible to estimate the effective rental rate required to justify new construction, and with the vacancy and collection allowance set forth, the potential gross market rent required to yield this effective rate.
When measured by potential rental revenue per unit per month (defined as the effective rental rate times the occupancy rate), the U.S.
Atlanta posted the third lowest tenant effective rental rate, $20.28 psf, whereas the highest is Midtown Manhattan at $94.34.
The current average effective rental rate for Class A office space in midtown Manhattan has surpassed the all-time high rental rates reached during the dot-com peak at the end of 2000.
The multi-family purchase market remains heated, even with the residential net effective rental rate in the Manhattan market seeing an increase of less than 1% rental growth in the past year.
Ultimately, after looking at several alternatives, we were able to consummate an effective rental rate that included considerable base building upgrades at a healthy market construction allowance.
In these cases, we typically engage the landlord in simultaneous negotiations which yields our customer a longer lease term, locked in at a below market average effective rental rate. A trained tenant representative, working on behalf of the subtenant, can bring these issues and many others to the fore and help resolve them.
As such, he explains that the annual decrease has generally been marginal, though he concedes that the underlying picture has been distorted, with net effective rental rates being eroded by incentives such as longer rent-free or fit-out periods.
'With the incoming supply of 18 to 20 million square feet estimated to enter the market in the next few years, continued pressure will be seen on the occupancy rates and effective rental rates,' it said, noting however that offices in integrated developments with good transport connectivity will remain attractive for companies seeking to rent.
The office market leveled out in the mid to high-end areas, Grade A office space achieved net effective rental rates estimated at Dh1,700 ($462) per sq m for fully fitted space; an indication that rental rates have now bottomed out.
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