CRE glossary
Base rent
Base rent is the headline rent in a commercial lease, quoted in dollars per rentable square foot per year ($/SF/year). Base rent excludes operating expenses (NNN, CAM, taxes, insurance) which are added separately in NNN structures, and includes everything in full-service or gross structures. It's the number that prints to the comp record.
Base rent is the comp anchor for the entire submarket. When CompStak or VTS reports 'Plaza District Class A office is $95/SF,' that's the base rent number. Operating expenses, free rent, and TI don't appear in the headline, which is why brokers pitch on effective rent (base + concessions + escalations, present-valued) when comparing options.
Base rent typically escalates over the term. The most common structure is a fixed annual increase (2.5%, 3%, 3.5% are typical for office). Other structures include CPI-indexed (rent rises with inflation, often capped at 5%/yr and floored at 0%), step rents (defined dollar increases at fixed intervals), and fair-market revaluation (rent resets to market at predefined milestones, common in renewal options).
Base rent gets quoted three ways depending on submarket convention: per-SF-per-year ($75/SF/yr, the most common), per-SF-per-month ($6.25/SF/mo, common in California retail), or total monthly ($93,750/mo). Always confirm the convention; a New York broker quoting per-year and an LA broker quoting per-month can talk past each other for an entire deal cycle.
Example
- Year 1 base rent
- $58.00/SF
- Annual escalation
- 3.0%
- Year 7 base rent
- $71.30/SF
- Total base rent (12,500 SF, 84 mo)
- ~$5.4M
Broker perspective
The base rent quote is what the principals will remember; everything else is forgotten by week 4. So move the negotiation to the levers that print invisibly, TI, free rent, escalations. A landlord will protect the $95 base-rent number to the death because it sets future comps in the building. The same landlord will drop $20/SF in TI without flinching because it doesn't comp.
Frequently asked
People also ask
Why do landlords care about the base rent number?
Because base rent prints to the comp record. A $58/SF deal becomes the floor for the next deal in the building. Landlords trade everything to protect this number, TI, free rent, parking, signage.
Are base rent and effective rent different?
Yes. Base rent is the headline. Effective rent is the present-valued average over the term net of TI, free rent, and other concessions. Effective is what tenants should compare.
What's a typical escalation?
Office: 2.5–3.5% annually. Retail: 2.5% or step structures. Industrial: 3% or CPI. Always negotiate a CPI cap if you go that route.
How do I compute total base rent over the term?
Sum of (rent × SF) for each year, accounting for escalations. DealDesk's modeler does this automatically and presents three scenarios side-by-side.
Related terms
Effective rent
Present-valued average rent over the term, net of free rent and TI, the real apples-to-apples cost number.
Free rent (abated rent)
A period at the start of the term where the tenant pays no base rent, used to offset move-in costs and competitive pricing.
Escalation (annual rent increase)
The mechanism for increasing base rent over the term, fixed percentage, CPI-indexed, or stepped.
Tenant improvements (TI / TIA)
Money the landlord contributes toward customizing the space for the tenant, usually expressed as $/SF.
See base rent extracted from a real lease.
Drop a 60-page lease, get a 38-field abstract in 90 seconds, every value cited back to the source page.