lease comparison
What questions should a business ask before signing a commercial lease?
What questions should a business ask before signing a commercial lease?
Ask who pays extras, when credits land, what dates start, and which options survive. Then ask for one rate on the walk.
This page belongs to a validation / pilot concept. It is not generally available. Payment is not collected.
Questions this page also answers
What does this page answer?
Ask who pays extras, when credits land, what dates start, and which options survive. Then ask for one rate on the walk.
What should sit beside it?
The nearby owner page and one worked walk.
What is not answered here?
A legal read and a location vote.
What is the next step?
Open the related compare or model page and keep the same rate.
Plain-language definition
A signing question is a cash-and-risk question.
The sticker is one line, not the lease.
Options and penalties belong on the same list.
A missing date is a hidden month of rent.
Legal review still follows the math.
This page sits under Lease comparison.
Need the next step? Open What belongs in a comparison.
See Hidden occupancy costs when you want the nearby walk.
Open How brokers compare LOIs if this page is not the last step.
Investopedia defines net present value as later cash brought back to today. See Investopedia on NPV.
Why it matters
Businesses sign the rent they can say out loud and miss the extras.
A later tax jump can exceed the rent win.
Renewal language changes the real term.
A short question list prevents a long regret.
How it works
- Ask for the occupancy stack.
- Ask when free rent and TI pay.
- Ask commencement and expiration.
- Ask about caps and options.
- Ask to see one discounted walk.
Formula in words. Sign only after stack + dates + options + rate are visible.
| Input | Meaning |
|---|---|
| Start rent | First-year rent before extras |
| Extras | CAM, tax, or insurance the tenant still pays |
| Credits | Free rent or build-out money |
| Term | How many years the cash list runs |
| Discount rate | How hard later cash is shrunk |
Worked example
Here is a teaching sample. It is not customer data and not a result from a live client.
| Metric | Path A | Path B |
|---|---|---|
| Start rent | $40,000 | $37,200 |
| Year-1 extras | $11,000 | $11,770 |
| Year-1 credit | $15,000 | $8,250 |
| Sample NPV | $371,169 | $362,092 |
| Year | Rent | Extras | Credit | Cash out | Value today |
|---|---|---|---|---|---|
| Year 1 | $40,000 | $11,000 | $15,000 | $36,000 | $33,333 |
| Year 2 | $41,200 | $11,330 | $0 | $52,530 | $45,036 |
| Year 3 | $42,436 | $11,670 | $0 | $54,106 | $42,951 |
| Year 4 | $43,709 | $12,020 | $0 | $55,729 | $40,962 |
| Year 5 | $45,020 | $12,381 | $0 | $57,401 | $39,066 |
| Year 6 | $46,371 | $12,752 | $0 | $59,123 | $37,258 |
| Year 7 | $47,762 | $13,135 | $0 | $60,897 | $35,533 |
| Year 8 | $49,195 | $13,529 | $0 | $62,724 | $33,888 |
| Year 9 | $50,671 | $13,935 | $0 | $64,606 | $32,319 |
| Year 10 | $52,191 | $14,353 | $0 | $66,544 | $30,823 |
| Sample NPV | — | — | — | — | $371,169 |
Sample NPV for Signing-question sample is about $371,169. A second path lands near $362,092.
Year 1 of Signing-question sample has rent of $40,000.
Shared building cost is $11,000.
A credit of $15,000 lowers the cash you pay that year.
Cash out this year is about $36,000. Year one carries the Signing-question sample credit.
Later cash gets a shrink for time. At 8 percent, year 1 is worth about $33,333 today.
Next, year 2 rent is $41,200.
Assumptions
- The Signing-question sample uses one visible 8 percent rate.
- Credits hit in year one unless the page says otherwise.
- Both options share the same extra basis.
- No percentage rent sits in this teaching walk.
Edge cases
A mid-year start needs a stub period, not a fake full year.
A credit that pays later must move to that later year.
A cap on extras changes the later risk, not the first sticker.
Common mistakes
- Asking only about face rent.
- Skipping CAM caps.
- Ignoring start dates.
- Treating an LOI as a lease.
Decision implications
Ask who pays extras, when credits land, what dates start, and which options survive. Then ask for one rate on the walk.
If the gap is thin, show a second rate before anyone picks.
If one path wins only from a mistimed credit, rebuild the list.
This page answers one question. Nearby pages cover the next step.
See What belongs in a comparison when you need that next step. Open Hidden occupancy costs for the nearby walk. Use How brokers compare LOIs if you want a second path.
Limits
- The number does not score daylight, transit, or floor plate.
- The number does not replace a legal read.
- Do not let one metric pick a space the team cannot use.
- Do not use this page as a clone of a nearby question.
U.S. BLS describes how brokers advise clients on property deals. See BLS broker occupation data.
Next step
This site is a validation / pilot concept. It is not generally available. Payment is not collected.
Ready for a bounded next step? Request Pilot Access or see how it works and compare commercial leases.
How do you compare two commercial lease proposals? · How do free rent periods and tenant improvement allowances affect NPV? · How do you compare leases with different term lengths? · How do you normalize commercial lease proposals? · How do you compare a gross lease and a net lease? · What belongs in a commercial lease comparison? · How do tenant-rep brokers compare lease offers? · How do CFOs review commercial lease comparisons?
Trusted sources
These are public references. They are not endorsements and not client results.