Compare two lease options using all-in occupancy cost rather than face rent alone.
The tenant is comparing two lease options by face rent only. DCF discipline: compare timed cash flows, not isolated headline numbers. Do not call a lease cheaper because the rent line is lower. If extra TI, temporary space, operating expense exposure, or delayed occupancy moves cash, the face-rent comparison is incomplete. Before Option A is $38/SF and Option B is $41/SF, so A looks cheaper. After Option B is $80,000 cheaper over five years after TI, operating expenses, and temporary space are included. Face rent Option A: $38/SF x 20,000 SF. Option B: $41/SF x 20,000 SF. Start with the…
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