Compare options on a shared occupancy-cost timeline: rent, escalations, tenant improvement allowance, free rent, and CAM, then discount that stream to NPV at an explicit rate. Face rent alone hides timing and incentive differences.
How do you compare leases with different terms?
Lock the same measurement period, place incentives on the cash-flow timeline, choose a discount rate you can explain, and test nearby rates so a shorter term is not treated as automatically cheaper.
How do you compare leases with different lease terms?
Different lease terms require a shared occupancy window before NPV is computed. A five-year stream and a three-year stream are not comparable until the unmodeled years are stated as an assumption.
What is occupancy cost?
Occupancy cost is the tenant’s economic cost of occupying the space: base rent, CAM or operating expenses where the tenant pays them, and the timed effect of free rent and tenant improvement allowance.
How should lease incentives be timed in a model?
Lease incentives should be placed in the period when cash actually moves. Free rent reduces early rent. Tenant improvement allowance is a credit or reimbursement, not a slogan subtracted from face rent unless that is the deal structure.
Face rent, base rent, and occupancy cost
Face rent is the printed starting headline. Base rent is the contractual rent schedule before incentives. Occupancy cost is what the tenant actually bears after CAM, free rent, and TI timing. Tenant-rep work fails when those pieces live in separate emails and a separate tab.
CAM, operating expenses, TI, free rent, and escalations
CAM and operating expenses can dwarf a small face-rent difference. Tenant improvement allowance changes year-one cash. Free rent changes the early periods and sometimes the escalation base. Rent escalations change later cash-flow differences and can reverse a ranking after discounting.
Different terms and incentive timing
A shorter term is not automatically cheaper. The unmodeled years after expiry are a relocation or renewal problem. Incentive timing matters because a TI check in month fourteen is not the same as two months of free rent in month one.
NPV versus effective rent and qualitative factors
Effective rent averages concessions across the term. NPV discounts the cash-flow stream. They answer different questions. Qualitative factors — operations, flexibility, and unmodeled clauses — still sit outside both numbers.
Worked comparison
ILLUSTRATIVE EXAMPLE. Lease A versus Lease B on one occupancy-cost basis.
ILLUSTRATIVE EXAMPLE — Lease A versus Lease B, not customer data
Input
Lease A
Lease B
Start rent
$42,000
$39,000
CAM
$8,400
$9,100
TI credit, year 1
$18,000
$12,000
Free rent
2 months
1 month
Escalation
3% / year
5% / year
NPV @ 8%
$186,400
$191,220
ILLUSTRATIVE EXAMPLE — cash-flow periods, not customer data
Period
Lease A net occupancy
Discounted @ 8%
Year 1
$32,400after free rent and TI
$30,000
Year 2
$51,912
$44,500
Year 3
$53,469
$42,430
Year 4
$55,073
$40,470
Year 5
$56,726
$38,600
Lease B’s cheaper headline does not win after CAM, thinner TI, less free rent, and faster escalations are placed on the cash-flow timeline and discounted.
Common comparison mistakes
Ranking by face rent while CAM and incentives live elsewhere.
Ignoring when cash moves.
Using different measurement periods without saying so.
The proposed workflow keeps cash-flow compare, NPV + sensitivity, and a shareable client summary together so tenant-rep brokers do not rebuild a workbook deal by deal.
A longer comparison sequence brokers can reuse
Start with the same occupancy window. Restate gross and net structures so operating expenses are visible. Place CAM on the timeline. Place free rent in the actual months. Place tenant improvement allowance in the period cash moves. Apply escalations. Discount. Then change the rate. If the ranking flips, the meeting is about timing, not about who typed the prettier headline.
Percentage rent, if present, belongs as an explicit scenario. Renewal options are usually deferred unless the client is choosing a term that only works if a renewal is treated as certain. Those deferred questions stay mapped so they do not silently disappear.
This page is the comparison method. NPV, TI, CAM, free rent, and escalations are the supporting cluster. The homepage and the tenant-rep page are the commercial path. Pricing remains a hypothesis: $290 per year or $149 per deal. Payment is not collected. Positioning: occupancy-cost comparison. Product visualization sits in the tables. Benefits include a shareable ranking. Use cases are tenant-rep meetings. Trust or disclosure: illustrative samples, not legal advice.
Why it matters
Deeper explanation of commercial lease comparison belongs in the comparison because face rent alone hides timing. How it works in practice: put the cash event on the occupancy-cost timeline, then discount. This is the next logical step after reading a definition.
Related concepts
Related concepts include occupancy cost, NPV, tenant improvement allowance, free rent, CAM, and rent escalations. Contextual CTA: request a validation pilot only after the numbers are explicit.
Common mistakes are listed on this page. Authority sources sit below. Internal links connect the hub, the comparison method, and early access.
Example
ILLUSTRATIVE EXAMPLE. The Lease A versus Lease B figures used across this site are educational samples, not customer results. They exist so commercial lease comparison can be seen beside rent, CAM, TI, free rent, and escalations instead of as an isolated slogan.
How it works
Capture the term. Place it on the cash-flow stream. Discount. Compare. Keep the assumption visible. That sequence is the product visualization of the proposed workflow, not a production screenshot.
A fuller reading of commercial lease comparison
A reusable comparison has to survive a second option arriving on Friday afternoon. That is when face rent wins unless CAM, free rent, tenant improvement allowance, and escalations are already on the same occupancy-cost timeline. Different lease terms make the problem worse: a three-year option and a five-year option are not ranked by adding the printed years. Lock the measurement period, state the unmodeled years, then discount. Qualitative factors still sit outside the number. Operations, flexibility, and counsel review are not NPV outputs. The proposed product visualization is a workspace that keeps those limits visible next to the ranking.
Tenant-rep brokers still have to verify the lease. This page does not replace counsel. It does not claim FASB, NAIOP, or BOMA endorsement. It uses those organizations as independent professional context so a citation-ready answer can name the entity, state the fact, and show the limitation.
If two options differ only by a brochure number, the comparison is unfinished. If they differ by when cash moves, the comparison is an NPV problem. If they differ by who pays operating expenses, the comparison is a structure problem. commercial lease comparison is one of those differences. The proposed focused workflow keeps those differences on one shareable client summary.
Pricing remains a hypothesis: $290 per year or $149 per deal. Payment is not collected. Willingness to pay is not proven. A serious owner can publish this page because the example is labeled, the sources are named, and the conversion path is honest.
who is this not for: this workflow is not for landlords running a portfolio, not for property managers administering occupied buildings, and not for teams that need a full brokerage suite. It is also not for anyone who wants a finished product with checkout today.
Objections worth answering now
This is not a finished product. Payment is not collected on this site. A lower NPV is not automatically the better occupancy choice. Sample figures are illustrative and are not customer results.
