Net Effective Rent (NER)
Net effective rent is a measure of expected income after accounting for concessions and incentives over the lease term, contrasting with "face rent." It can be expressed as the net present value of rent payments net of abatements or incentives, translated into an effective rate over the lease period.
- Where it applies
- Generally, not specific to New York
- When it comes up
- Leasing; underwriting; valuation
- Property types
- Office and retail leasing; commercial leasing generally
In practice
- Because NER is PV-impacted, the assumed discount rate and timing of concessions (front-loaded vs spread) materially change the computed effective rate.
Read more in the Knowledge Base
- Rent Concession Structures - Free Months, Reduced Rent, and Net Effective RentLandlords
- The Concession ParadoxLandlords
- Understanding Effective Rent and ConcessionsRenters
- The Effective Rent CalculatorRenters
- Rental Comp Analysis Methodology - Selecting, Adjusting, and Weighting ComparablesLandlords
Related terms
ConcessionsEffective RentFace RentFree RentPVconcessionsface rentfree renttenant improvement allowance
Operating Performance Metrics
- Average Daily Rate (ADR)
- EBITDA Per Available Room (EBITDA PAR)
- Gross Operating Profit Per Available Room (GOPPAR)
- Labor Cost Per Available Room (LPAR)
- Load Factor (Common Area Factor / Loss Factor)
- Occupancy Cost
- Occupancy Cost Ratio
- Rentable Area
- Revenue Per Available Room (RevPAR)
- Sales per Square Foot
General information, not legal, tax or financial advice.