Calculate true rental costs after concessions, free months, and tenant improvements
Net Effective Rent
How Concessions Affect Your Rent
Visualization showing gross vs net effective rent
What Is Net Effective Rent?
Net Effective Rent (NER) is the actual average rent paid after accounting for all concessions like free months, tenant improvement allowances, and other incentives. It’s lower than the gross (sticker) rent and provides a truer cost comparison between properties.
NER Formulas
Monthly NER
Annual NER
Per SqFt NER
Real-World Examples
Scenario: 12-month apartment lease at $2,500/month with 1 free month and $1,000 moving allowance
Calculation: ($2,500 × 11 – $1,000) ÷ 12 = $2,292/month NER
Savings: $208/month (8.3% lower than gross rent)
Frequently Asked Questions
What’s the difference between gross rent and net effective rent?
Gross rent is the stated rental amount before any concessions. Net effective rent accounts for free months, tenant allowances, and other incentives to show the actual average rent paid over the lease term.
How do tenant improvement allowances affect NER?
TI allowances reduce NER because they’re effectively cash contributions from the landlord that offset your rental costs. A $10,000 TI allowance on a 12-month lease reduces your NER by $833/month ($10,000 ÷ 12).
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