Commercial Market Rent Studies
A market rent study concludes a supported rental rate for a specific property and lease context. Owners, tenants, lenders, and attorneys use it to test whether asking or contract rents align with the market.
A market rent study is a consulting and analysis assignment focused on one question: what rental rate does the market support for this property, for this space, under these lease terms? It is not, by itself, a market-value appraisal. The deliverable is a report with a supported rental conclusion and the evidence behind it, which the client uses for leasing, negotiation, or underwriting decisions.
Market rent depends on more than a price per square foot. Lease length, expense structure (gross, modified gross, or triple net), tenant improvements, free rent, and concessions all change the effective rent a tenant actually pays. We state the assumptions behind the conclusion so the client can compare it apples-to-apples with their own lease terms.
When Clients Need This Service
Owners use market rent studies to set asking rents, evaluate renewal offers, and benchmark performance. Tenants use them to negotiate new leases or renewals and to confirm they are paying a competitive rate. Lenders use them to test the rent assumptions in a pro forma or to validate income on a loan.
For example, an office landlord renewing a large tenant may want to know whether the tenant's request for a rent reduction reflects the current market. A retail owner leasing end-cap space may need a supported rate before listing. In a partnership dispute or divorce, an accurate market rent can matter to the income approach used in a related valuation. In each case the question is specific to the property, the space, and the lease terms.
What the Analysis Considers
The factors relevant to this assignment vary with the property and the question being asked. Depending on the agreed scope, the analysis may consider:
- Recent comparable leases for similar space in the submarket, adjusted for differences
- Lease structure—gross, modified gross, triple net—and how it affects effective rent
- Concessions: tenant improvements, free rent, moving allowances, and brokerage
- Space attributes: floor, frontage, condition, parking, signage, and build-out
- The subject property's competitive position relative to comparable properties
- Current vacancy and absorption trends in the submarket
- The specific lease terms the conclusion assumes
Not every assignment applies all three valuation approaches. The approaches used depend on the property type, available data, and the assignment's intended use.
Documents & Information That May Help
Providing the following can streamline an assignment, but not every item is required to begin. We can discuss what is available during the initial call.
Rent roll and current leases for the property
Floor plans, unit mix, or suite details
Operating expenses and expense-stop or NNN structure
Recent comparable leases you're aware of
Helpful but not required
Marketing materials and competing property rent quotes
How the Engagement Works
Every engagement begins with a conversation so the scope, fee, and timing fit the property and the question you need answered. A typical engagement moves through these stages:
Initial discussion
We confirm the property, the space, and the lease terms the conclusion must reflect.
Scope confirmation
We agree on the lease structure assumed, the deliverable, fee, and timing.
Market research
We gather comparable leases and asking rents for similar space in the submarket.
Analysis
We adjust comparables for differences in size, term, condition, and lease structure to reach a supported conclusion.
Delivery
We deliver the report with the conclusion and the supporting lease evidence.
Scope, fees, and timing depend on the property type, assignment complexity, and the report format the client or intended user requires. We confirm these in writing before work begins.
Frequently Asked Questions
Common questions about this service.
Closely Related Services
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