How do you determine lease rates in your market?

1 Market Conditions

The first factor to consider is the supply and demand of your market. How much space is available for lease, and how much demand is there from tenants? How does your market compare to other nearby or similar markets in terms of vacancy, absorption, and rent growth? These indicators will help you gauge the overall strength and direction of your market, and how much leverage you have as a landlord or tenant.

2 Property Characteristics

The second factor to consider is the specific characteristics of your property. How does it compare to other properties in your market in terms of location, quality, size, amenities, and features? How does it meet the needs and preferences of your target tenant profile? How does it perform in terms of occupancy, tenant retention, and operating expenses? These factors will help you determine the value and appeal of your property, and how much rent you can charge or negotiate.

3 Lease Terms and Structures

The third factor to consider is the terms and structure of your lease. How long is the lease term, and what are the options for renewal or termination? How are rent increases, concessions, and incentives structured? How are operating expenses, taxes, insurance, and maintenance allocated between the landlord and tenant? How are improvements, repairs, and alterations handled? These factors will affect the net effective rent and the cash flow of your lease, and how much risk and reward you are willing to assume.

4 Comparable Transactions

The fourth factor to consider is the comparable transactions in your market. How do the lease rates of similar properties and leases compare to yours? How recent and relevant are these transactions, and what adjustments do you need to make for differences in location, quality, size, terms, and conditions? How do you source and verify these transactions, and what sources of data and information do you use? These factors will help you benchmark and justify your lease rates, and how much room you have for negotiation.

5 Market Trends and Forecasts

The fifth factor to consider is the market trends and forecasts for your market. How are the economic, demographic, and industry trends affecting your market? How are the supply and demand dynamics expected to change in the short and long term? How are the rent levels and growth rates projected to evolve in the future? These factors will help you anticipate and adapt to the changing market conditions, and how much flexibility and foresight you need in your lease rates.

6 Lease Rate Analysis

The sixth factor to consider is the lease rate analysis for your lease. How do you calculate the gross, net, and effective rent for your lease, and what are the differences and implications of each? How do you compare the present value and internal rate of return of different lease scenarios, and what are the assumptions and variables involved? How do you communicate and present your lease rate analysis to your clients, prospects, and stakeholders, and what tools and techniques do you use? These factors will help you evaluate and optimize your lease rates, and how much skill and expertise you need in your analysis.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?