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Use when computing Net Effective Rent (NER), Net Present Value of cash flows, breakeven analysis, or applying the Ponzi Rental Rate framework to compare lease offers with different free rent, TI, escalation, and term structures.
Codex 또는 Claude로 설치 이 Prompt를 복사해 Codex, Claude 또는 다른 어시스턴트에 붙여 넣으면 Skill 페이지를 검토하고 설치를 진행할 수 있습니다.
SOC 직업 분류 기준
Use when constructing comparable sales adjustment grids, quantifying adjustments via paired sales or hedonic regression, validating gross/net adjustment limits, or reconciling adjusted sale prices. Triggers on sales comparison appraisals, sales grid construction, market-extracted adjustments. Key terms: adjustment hierarchy, paired sales, hedonic regression, gross/net adjustment limits, sensitivity analysis.
Use when valuing transmission towers, telecom sites, substations, or specialized infrastructure where market comparables are unavailable or incomplete. Apply replacement cost new (RCN) less depreciation, or reconcile cost approach with limited market data. Key terms: RCN, physical/functional/external depreciation, indirect costs, age-life method, depreciated replacement cost.
Use when valuing utility transmission easements, pipeline corridors, rail/transit corridors, access easements, telecom sites, or temporary construction easements. Apply percentage of fee method, income capitalization, before/after paired sales, or rate-of-return for TCEs. Key terms: percentage of fee, income capitalization, paired sales, discount rate, agricultural rent, TCE.
Use when reviewing Phase I/II ESA reports, evaluating contaminated site acquisitions, estimating remediation costs, analyzing MOE regulatory pathways (Tier 1/Tier 2, RSC filing), or allocating environmental liability between buyer and seller. Triggers on RECs, soil/groundwater exceedances, brownfield redevelopment, and contamination-driven price adjustments.
Use when valuing telecom ground leases, agricultural rental land, fee interests under ground leases, or perpetual easement income streams. Capitalize land rent to derive value via market rent analysis and cap rate selection (extraction, band of investment, build-up). Key terms: NOI, cap rate, market rent, ground lease, reversion value, sensitivity analysis.
Use when reviewing title search reports, parsing registered easements/covenants/liens/environmental charges, assessing marketability defects, or quantifying encumbrance discounts during acquisition due diligence. Triggers on Ontario Land Titles searches, restrictive covenant analysis, registration defect detection, and cumulative encumbrance discount calculations.
| name | effective-rent-analyzer |
| description | Use when computing Net Effective Rent (NER), Net Present Value of cash flows, breakeven analysis, or applying the Ponzi Rental Rate framework to compare lease offers with different free rent, TI, escalation, and term structures. |
Effective rent analysis determines the true economic value of a lease deal to the landlord by:
Critical Insight: Gross/headline rent is misleading. Landlords must analyze NPV to understand true deal economics.
Definition: The constant monthly rent (annuity) that has the same NPV as the actual lease cash flows, net of all tenant incentives.
Formula:
NER = NPV ÷ PV(Annuity Factor)
Where:
NPV = Present value of all lease cash flows (rent - incentives)
PV(Annuity Factor) = Present value of $1/month for lease term at discount rate
Example:
Definition: NER before deducting landlord costs (TI, leasing commissions, free rent).
Used for tenant comparison (tenant doesn't care about landlord's costs), but landlords must use NER for investment decisions.
Developed by: R.T. Eppli, C.C. Tu, and M.J. Seiler
Key Insight: NER must exceed a breakeven threshold to recover:
Breakeven NER Formula:
Breakeven NER = (TI + LC) × [i + (i ÷ ((1+i)^n - 1))] ÷ Rentable Area
Where:
TI = Tenant Improvement costs
LC = Leasing Commissions
i = Discount rate (landlord's cost of capital)
n = Lease term in years
Investment Decision:
Accounts for:
Use when: Analyzing whether deal generates positive cash flow, not just NPV.
Required inputs:
Month-by-month cash flow:
Month 1-3: Free rent → Cash flow = $0
Month 4-12: Full rent → Cash flow = Base Rent × Rentable Area
Month 13+: May escalate → Cash flow = Escalated Rent × Rentable Area
Discount all future cash flows to present value:
NPV = Σ [Cash Flow(t) ÷ (1 + i)^(t/12)]
Where t = month number
Subtract upfront costs:
NPV(net) = NPV(rent) - TI - Leasing Commissions
Convert NPV to constant annuity:
PV(Annuity) = Σ [1 ÷ (1 + i)^(t/12)] for t = 1 to term_months
NER ($/month) = NPV ÷ PV(Annuity)
NER ($/sf/month) = NER ($/month) ÷ Rentable Area
Using PRR formula:
Breakeven = (TI + LC) × [i + (i ÷ ((1+i)^n - 1))] ÷ Area
If NER > Breakeven:
→ Deal creates value
→ NPV = positive
→ Accept or negotiate better terms
If NER < Breakeven:
→ Deal destroys value
→ NPV = negative
→ Reject or require higher rent / lower concessions
Spread = NER - Breakeven
Excessive Free Rent:
High TI Allowance:
Short Term + High Concessions:
Backloaded Rent:
Negative NPV:
Thin Spread:
Long Payback:
7 years to recover TI and commissions
Negative Leverage:
Situation: Tenant offers $18/sf with 6 months free rent and $15/sf TI for 5-year lease (10,000 sf industrial).
Analysis:
Output:
NER: $16.25/sf/year
Breakeven: $15.80/sf/year
Spread: $0.45/sf/year
NPV: $2,250
Recommendation: Accept (positive NPV, but thin spread - require security deposit)
Situation: Landlord receives two offers for same space:
Analysis: Calculate NER for both offers to determine which creates more value.
Output:
Offer A:
NER: $18.50/sf
NPV: $92,500
Payback: 3.2 years
Offer B:
NER: $17.80/sf
NPV: $53,400
Payback: 5.1 years
Recommendation: Accept Offer A (higher NPV, faster payback)
Situation: Existing tenant at $15/sf requests renewal at $16/sf with 3 months free rent and $5/sf refresh TI. Market rent is $18/sf for new tenants with typical concessions ($10/sf TI, 3 months free).
Analysis: Compare renewal NER vs new tenant NER to determine if renewal creates incremental value.
Output:
Renewal NER: $15.20/sf (after concessions)
New Tenant NER: $16.00/sf (after new deal concessions + 6 months downtime)
Recommendation: Accept renewal (avoids downtime, lower TI)
Situation: Landlord needs to set asking rent for vacant space. Recent comparable leases show $18-22/sf gross, but with varying concession packages.
Analysis: Calculate NER for all comparables to establish true market NER, then work backward to determine asking rent that achieves target NER.
Output:
Market NER Range: $16.50-$18.00/sf
Target NER: $17.00/sf
Asking Rent (with standard concessions): $19.50/sf
This skill is automatically loaded when:
/effective-rent, /renewal-economics*offer*lease*, *_input.json in Eff_Rent_CalculatorRelated Commands:
/effective-rent <lease-or-offer-path> <landlord-params-json-path> - Full NER/NPV analysis with Ponzi Rental Rate breakeven/renewal-economics <current-lease-path> - Renewal vs. relocation NPV comparisoncommercial-lease-expert skill, which auto-loads on relevant questionsInputs:
Calculations:
Gross Rent Stream:
Free Rent Adjustment:
NPV of Rent:
Upfront Costs:
Net NPV:
NER:
Breakeven NER (PRR):
Investment Decision:
NER: $7.93/sf/year
Breakeven: $1.71/sf/year
Spread: +$6.22/sf/year
NPV: $814,950
Payback: 2.1 years
RECOMMENDATION: ACCEPT - Strong positive NPV, wide spread, fast payback
Inputs:
Calculations:
Investment Decision:
NER: $28.00/sf/year
Breakeven: $7.32/sf/year
Spread: +$20.68/sf/year
NPV: $979,350
Payback: 1.9 years
RECOMMENDATION: ACCEPT - Excellent economics, long-term stable tenant
Skill Version: 1.0
Last Updated: November 13, 2025
Related Skills: commercial-lease-expert, offer-to-lease-expert, negotiation-expert, portfolio-strategy-advisor
Related Commands: /effective-rent, /renewal-economics (market rent benchmarking and VTS approval memos are now generated via the commercial-lease-expert skill, which auto-loads on relevant questions)