Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Effective rent per sqft (net of TI/LC)
$22.56
Effective annual rent
$112,786
Total TI + commission cost
$120,500
Amortized annual TI/LC cost
$17,214
Gross annual base rent
$130,000
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How to use this
- 1Enter leased square footage (sqft).
- 2Enter base rent per sqft per year ($/sqft).
- 3Enter ti allowance per sqft ($/sqft).
- 4Enter lease term (years).
- 5Enter leasing commission (% of total lease value) (%).
- 6Read your effective rent per sqft (net of ti/lc) on the right — it updates as you type.
- 7Hit Share to keep the scenario or send it to someone.
About this calculator
Tenant improvement (TI) allowances and leasing commissions (LC) are real cash costs landlords pay to sign a lease, and lumping them into a simple cap rate or NOI calculation without amortizing them properly overstates a deal's true economics. This calculator spreads TI and LC costs evenly across the lease term to compute an amortized annual cost, then nets that against contractual base rent to show effective rent — the number that actually reflects what you're netting after landlord-side leasing costs. It also shows the total capital outlay upfront, since even though it's amortized for analysis purposes, the cash goes out at lease signing or tenant move-in, which matters for a landlord's short-term liquidity and financing needs. Comparing two competing lease proposals on face rent alone is a common mistake — a $28/sqft deal with a $10/sqft TI allowance and 6% commission is often worse than a $26/sqft deal with a $4/sqft allowance and the same commission, and this calculator makes that comparison explicit rather than leaving it to gut feel.
Worked example
Using the values the calculator loads with:
Inputs
- Leased square footage: 5000 sqft
- Base rent per sqft per year: 26 $/sqft
- TI allowance per sqft: 15 $/sqft
- Lease term: 7 years
- Leasing commission (% of total lease value): 5 %
Results
- Effective rent per sqft (net of TI/LC): $22.56
- Effective annual rent: $112,786
- Total TI + commission cost: $120,500
- Amortized annual TI/LC cost: $17,214
- Gross annual base rent: $130,000
What each field means
Inputs
- Leased square footage (sqft)
- The leased square footage used in the calculation, measured in sqft. Starts at 5000 sqft so you have a working example on load.
- Base rent per sqft per year ($/sqft)
- The base rent per sqft per year used in the calculation, measured in $/sqft. Starts at 26 $/sqft so you have a working example on load.
- TI allowance per sqft ($/sqft)
- The ti allowance per sqft used in the calculation, measured in $/sqft. Starts at 15 $/sqft so you have a working example on load.
- Lease term (years)
- The lease term used in the calculation, measured in years. Starts at 7 years so you have a working example on load. Accepted range: 1–20 years.
- Leasing commission (% of total lease value) (%)
- The leasing commission (% of total lease value) used in the calculation, measured in %. Starts at 5 % so you have a working example on load. Accepted range: 0–10 %.
Results
- Effective rent per sqft (net of TI/LC)
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Effective annual rent
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Total TI + commission cost
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Amortized annual TI/LC cost
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Gross annual base rent
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Should TI/LC amortization include interest?
Some landlords amortize TI at an implied interest rate (essentially treating it as a loan to the tenant embedded in rent) rather than straight-line, which produces a higher effective annual cost early in the term. This calculator uses straight-line for simplicity; for precise underwriting, model it as a loan amortization if your lease structure charges the tenant back through rent with interest.
Why do TI allowances vary so much between deals?
Tenant improvement need depends heavily on space condition (vanilla shell vs. second-generation space with existing improvements), tenant type (medical and restaurant buildouts run far higher per square foot than general office), and market leverage — a strong tenant in a soft leasing market can negotiate a much bigger allowance.
How does this affect my cap rate underwriting?
Use effective rent, not face rent, when calculating in-place or projected NOI for a property with significant upcoming lease-up or renewal activity requiring TI/LC spend. Underwriting off face rent without netting these costs is one of the most common ways buyers overpay for value-add office and retail deals.
Do renewal leases usually cost less in TI/LC than new leases?
Yes, generally — renewals typically require far less TI (the tenant's space is already built out) and lower or no leasing commission in many markets, which is why retention-focused asset management (competitive renewal terms offered early) often beats chasing a slightly higher face rent from a new tenant that requires a full re-tenanting cost.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
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Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). TI/LC Amortization Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/ti-lc-amortization
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/ti-lc-amortization" target="_blank" rel="noopener">TI/LC Amortization Calculator — RevenueLab</a> (2026).</p>
Source: [TI/LC Amortization Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/ti-lc-amortization) (2026).