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Calculating the average annual effective rent is a crucial process for tenants and property owners. It offers an insightful measure of the true cost associated with leasing a property.
Effective rent accounts for all concessions, such as free rent periods or tenant improvements. It transforms them into a constant average rent over the lease term. This approach provides a clearer picture of lease obligations, beyond just the face value of rental agreements.
Understanding effective rent allows tenants to efficiently compare lease offers. It also helps landlords assess the profitability of lease agreements.
