TENANT MARKET

Tenant Market Section & Tabs

Keyboard shortcut: Ctrl + Alt + T

The Tenant Market section is used to create, define and edit named item expedites for a single property. This section is used for the input of market assumptions related to tenant leases, such as rent, free rent, rent increases, and capital for use as named items in the Rent Roll and Market Lease tabs.

Note: All of the tabs in the Tenant Market section represent named item expedites. The benefit of using named item expedites is that if such items are changed, the change will flow through to all areas where the named items are referenced.

Article contents:

• Rent
• Free Rent
• Increase
• TI, LC, & Other Capital
• Payout

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Rent

Ctrl + Alt displays the numeric keyboard shortcut.

The Rent tab is used to create and define named item assumptions for base rent.

Rent named items may be referenced in the following areas of the application:

• Rent Roll section > Rent Roll tab > Rent column > Named Item state
• Rent Roll and Property Market sections > Market Lease tab > Rent column > Named Item state

Info: Read about #, Code and Name throughout the Application

Rent Input Types

Rent named items may be entered in one of two carousel states: Basic or Detailed.

Basic Rent

Basic Rent is the default and is used to enter a single amount of rent (new and renewal) with named Inflation.

New and Renewal are the rent amount values as of the Analysis Begin date for new deals and renewal deals that are interpreted by the assigned Amt Type (the rent value to be used - New, Renewal or Weighted [based upon the Renewal Probability percentage] will depend upon the location within the application that the named item Rent is referenced).

Note: Entries are required in both the New and Renewal fields even if the amounts are the same. If no entry is made in the Renewal field, the amount will be interpreted as $0.

Amt Type interprets the New and Renewal values. Options include:

• /Mo is the monthly amount.
• /Yr is the annual amount.
• /Area/Mo is the monthly amount per Area.
• /Area/Yr is the annual amount per Area. /Area/Yr is the default unless another Amt Type is assigned in the Property section on the Defaults tab.

Hint: /Mo and /Yr will rarely, if ever, be used for named item Rent.

Inflation is a drop-down menu of named items created and defined in the Property Market section on the Inflation tab. "*MarketRent" is the default unless another is assigned in the Property section on the Defaults tab. The assigned named Inflation determines how the New and Renewal rent amounts will grow during the analysis term in order to set the initial rent amount for the Rent Roll lease record or Market Lease which references the named item rent.

Tenant Market - Basic Rent

Detailed Rent

Detailed Rent allows for changing, irregular rent values on a yearly basis.

Amt Type interprets the New and Renewal values and has options identical to the Basic state: /Mo, /Yr, /Area/Mo, /Area/Yr.

Inflation is a drop-down menu of named items created and defined in the Property Market section on the Inflation tab. "*MarketRent" is the default unless another is assigned in the Property section on the Defaults tab. The assigned named Inflation determines how the New and Renewal rent amounts will grow during the analysis term in order to set the initial rent amount for the Rent Roll lease record or Market Lease which references the named item rent.

Year is based from the Analysis Begin date. It is auto-incremented by 1 year as new rows are added and is read-only.

New is the rent amount value for a new lease commencing in the corresponding Year as interpreted by the selected Amt Type.

Renewal is the rent amount for a renewing lease commencing in the corresponding Year as interpreted by the selected Amt Type.

Note: Entries are required in both the New and Renewal fields even if the amounts are the same. If no entry is made in the Renewal field, the amount will be interpreted as $0.

 adds a row beneath the current row,  deletes the current row.

Tenant Market - Detailed Rent

Note: Detailed Rent will grow at the referenced named Inflation rate commencing with the Year subsequent to the final entry.

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Free Rent

Ctrl + Alt displays the numeric keyboard shortcut.

The Free Rent tab is used to create and define named item assumptions for free rent. Free rent represents tenant revenue (i.e., base rent, recoveries, and/or other tenant revenue) that is forgiven for a given time period.

Free Rent named items may be referenced in the following areas of the application:

• Rent Roll section > Rent Roll tab > Free Rent column > Named Item state
• Rent Roll and Property Market sections > Market Lease tab > Free Rent column > Named Item state

Info: Read about #, Code and Name throughout the Application

Free Rent Input Types

Free Rent named items may be entered in one of three carousel states: Basic, Detailed or Within Lease.

Basic Free Rent

Basic Free Rent is the default and is used to enter a single amount of free rent (new and renewal) that does not change throughout the Analysis Term.

New and Renewal are the number of months of free rent for new deals and renewal deals that are interpreted by the assigned Amt Type (the free rent number of months to be used - New, Renewal, or Weighted [based upon the Renewal Probability percentage] will depend upon the location within the application that the named item Free Rent is referenced). Fractional months are allowed.

Note: Entries are required in both the New and Renewal fields even if the amounts are the same. If no entry is made in the Renewal field, the amount will be interpreted as 0.

Amt Type interprets the New and Renewal values. Options include:

• Mos is the number of months the abatement will take place, taken from the start date of the lease term. Mos is the default unless another is assigned in the Property section on the Defaults tab.
• Mos/Yr is the number of months the abatement will take place, taken from the start of each lease year commencing with the start date of the lease. Mid-month starts or partial free months will calculate correctly.

Revenue reflects the component(s) of revenue that will be abated. Choices are:

• Rent - Base Rent only. Rent is the default unless another is assigned in the Property section on the Defaults tab.
• Rent + Recovery - Base Rent and Expense Recoveries
• All Revenues - Base Rent, Expense Recoveries, Percentage Rent, and Miscellaneous Revenue (as entered on the Rent Roll)
• Recovery - Recoveries only

Tenant Market - Basic Free Rent

Detailed Free Rent

Detailed Free Rent is used when the number of months of free rent changes during the analysis term on a yearly basis. For example, an improving leasing market might have 3 months free in year 1 of the analysis, 2 months in year 2, and then 0 thereafter.

Amt Type interprets the New and Renewal values and has options identical to the Basic state.

Revenue reflects the component(s) of revenue that will be abated and has options identical to the Basic state.

Year is based from the Analysis Begin date. It is auto-incremented by 1 year as new rows are added and is read-only.

New is the number of months of free rent for a new lease commencing in the corresponding Year as interpreted by the assigned Amount Type.

Renewal is the number of months of free rent for a renewing lease commencing in the corresponding Year as interpreted by the selected Amount Type.

Note: Entries are required in both the New and Renewal fields even if the number of months are the same. If no entry is made in the Renewal field, the number of months will be interpreted as 0.

 adds a row beneath the current row,  deletes the current row.

Tenant Market - Detailed Free Rent

Note: The number of months for the last year in which detailed entry is made will be carried forward for the remainder of the analysis.

Within Lease Free Rent

Within Lease Free Rent is used when the free rent changes within the lease term (e.g., the first 2 months of lease year 1 and the first month of lease years 2 and 3 are abated).

Amt Type interprets of the New and Renewal values. The only option available is Mos.

Note: Because Amt Type = Mos, enter a percentage value. For example, an entry of 1 = 100% (100% abatement for 1 month), an entry of .5 = 50% (50% abatement for 1 month), an entry of .075 for 7.5% (7.5% abatement for 1 month), etc. for the entered Date(s). If "2" is entered, that is 100% abatement for 2 months.

Revenue reflects the component(s) of revenue that will be abated and has options identical to the Basic state.

Month is the month value from the start of the lease term.

New is the number of months of free rent for a new lease as of the corresponding Month within the lease term.

Renewal is the number of months of free rent for a renewing lease as of the corresponding Month within the lease term.

Note: Entries are required in both the New and Renewal fields even if the number of months are the same. If no entry is made in the Renewal field, the number of months will be interpreted as 0.

 adds a row beneath the current row,  deletes the current row.

Tenant Market - Within Lease Free Rent

Read more: Entering Irregular Rent Abatements

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Increase

Ctrl + Alt displays the numeric keyboard shortcut.

The Increase tab is used to create and define named item increases that are used to determine how certain rent and expense recoveries will increase within a lease term.

Increase named items may be referenced in the following areas of the application:

• Rent Roll section > Rent Roll tab > Rent column > Basic & Named Item states
• Rent Roll & Property Market sections > Market Lease tab > Rent column > Basic & Named Item states
• Rent Roll & Property Market sections > Market Lease tab > Recovery column > Amt Input Type
• Recoveries section > Named Recoveries tab > Amt Input Type

Info: Read about #, Code and Name throughout the Application

Increase Input Types

System Increase

System is a non-editable Input Type of "*None" (no increase). No data input is required to use the System Increase.

Tenant Market - System Increase

Additional Increase named items may be entered in one of two carousel states: Basic or Detailed.

Basic Increase

Basic Increase is the default and is used to enter a single increase value that is applied annually within a lease term.

Amt is the amount value of increase interpreted by the assigned Increase Type.

Increase Type interprets the Amt value. Options include:

• % Increase Annually is used to apply a percentage increase to the rent or recovery amount each year during the lease term on the date specified in the Effective field (e.g., Base Rent increase by 3%/annum on each anniversary of the commencement date of the lease). % Increase Annually is the default unless another Increase Type is assigned in the Property section on the Defaults tab.
• % of Market Annually is used to re-set rent to a percentage of market rent (using the market rent as defined in the Market Lease for the lease record) each year during the lease term on the date specified in the Effective field (e.g., Base Rent increases to 100% of market rent on each anniversary of the commencement date of the lease).
• /Area/Yr Annually is used to increase rent or recoveries by an annual amount/area each year during the lease term on the date specified in the Effective field (e.g., Base Rent increases by $0.50/sf/annum on each anniversary of the commencement date of the lease).

Inflation is available only if (i) the Input Type is set to "Basic" and the Increase Type is set to "/Area/Yr Annually" or (ii) the Input Type is set to "% of Inflation." Inflation is a drop-down menu of named items created and defined in the Property Market section on the Inflation tab. The assigned named Inflation defines how the value in the Amt field (which is as of the Analysis Begin date) will grow throughout the analysis term. The annual increase value applied to a lease will therefore depend upon when the lease commences during the analysis term. If the annual increase per square foot is to remain constant throughout the analysis term, Inflation should be set to "*None".

Note: The Inflation field is used to determine the amount of the Increase that will then remain constant throughout the lease term.

Example: As of the Analysis Begin date, rent will increase by $0.50/sf/annum during each year of the lease term, and this increase will inflate by 5%/annum. Lease commencing:

• in Year 1 of the analysis would apply $0.50/sf/annum annual bumps to rent
• in Year 2 of the analysis would apply $0.525/sf/annum annual bumps to rent
• in Year 3 of the analysis would apply $0.551/sf/annum annual bumps to rent
• etc.

Effective sets the month within each year of the lease term that the Increase will occur. Options include:

• Calendar Year - Increase is effective on January 1 during each lease year.
• Lease Year - Increase is effective on the anniversary of the lease commencement date (if on the Rent Roll, this is the lease record Begin Date).
• Named Month (Feb. - Dec.) - Increase is effective on the 1st date of the selected month during each lease year (if January is desired, select "Calendar Year").

Tenant Market - Basic Increase

Note: When a new property is added, rDCF automatically includes three basic Increases: 2% per Lease Year, 3% per Lease Year and 4% per Lease Year. These Increases are editable by the user.

Detailed Increase

Detailed Increases are typically used for:

• Increases over a given periodicity, such as every 5 years
• Increases with differing amounts or Increase Types within a lease term

Month is the month during the lease term when the Increase will be effective.

Hint: A Month value of "1" should not be used; only the Month(s) upon which increases occur are required.

Increase is the amount value of increase interpreted by the assigned Increase Type.

Increase Type interprets the Increase value. Options include:

• % Increase is used to apply a one-time percentage increase on the specified Month (e.g., 10 year retail leases with a one-time 10% rent increase in month 61).
• % Increase Annually is used to apply a percentage increase commencing on the specified Month and recurring annually thereafter on each 12 month anniversary of such month. % Increase Annually is the default unless another Increase Type is assigned in the Property section on the Defaults tab.
• % of Market is used for a one-time re-set to a percentage of market rent (using the market rent as defined in the Market Lease for the lease record) on the specified Month.
• % of Market Annually is used to re-set to a percentage of market rent (using the market rent as defined in the Market Lease for the lease record) commencing on the specified Month and recurring annually thereafter on each 12 month anniversary of such month.
• /Area/Mo is used to apply a one-time amount increase expressed as an amount/area/month on the specified Month.
• /Area/Yr is used to apply a one-time amount increase expressed as an amount/area/year commencing on the specified Month (e.g., 10 year lease with a one-time $2.00/sf/yr increase in month 61).
• /Area/Yr Annually is used to apply an amount increase expressed as an amount/area/year commencing on the specified Month and recurring annually thereafter on each 12 month anniversary of such month.
• /Mo is used to apply an amount increase expressed as an amount/month on the specified Month.
• /Yr is used to apply an amount increase expressed as an amount/year on the specified Month.

 adds a row beneath the current row,  deletes the current row.

Note: Different Increase Types may be used on multiple rows. For instance, an Increase can be set up with a 10% Increase on month 37 and 5% Increase Annually on month 49. In this example, no increases would occur until month 37, at which time a one-time 10% increase would occur. 5% annual increases would occur beginning on month 49 (i.e., months 49, 61, 73, etc.).

Note: If any of the annually recurring Increase Types are used (% Increase Annually, % of Market Annually, /Area/Yr Annually), the annual increases will cease if another row with a different Increase Type has been added, effective on the specified Month for the new row (i.e., 2% Increase Annually effective month 13, 100% of Market effective month 61 would produce 2% increases on months 13, 25, 37 and 49, and then a one-time re-set of rent to market on month 61).

Tenant Market - Detailed Increase

% of Inflation Increase

% of Inflation Increases are used to enter increases that are a specified percentage of a previously defined Inflation value, typically the Consumer Price Index (e.g., tenant pays rent increases equal to 50% of the increase in the Consumer Price Index).

Amt is the percentage of the assigned Inflation value (50% would be entered as "50", not ".50").

Inflation is a drop-down menu of named items created and defined in the Property Market section on the Inflation tab. The assigned named Inflation will be adjusted by the percentage entered in the Amt field.

Effective sets the month within each year of the lease term that the Increase will occur. Options include:

• Calendar Year - Increase is effective on January 1 during each lease year.
• Lease Year - Increase is effective on the anniversary of the lease commencement date (if on the Rent Roll, this is the lease record Begin Date).
• Named Month (Feb. - Dec.) - Increase is effective on the 1st date of the selected month during each lease year (if January is desired, select "Calendar Year").

Note: Increases to Base Rent that are calculated using "% of Inflation Increase" are excluded from the calculation of Leasing Commissions. This is because these increases are typically associated with changes in the Consumer Price Index which, in practice, are excluded from commission calculations.

Tenant Market - % of Inflation Increase

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TI, LC, & Other Capital

Ctrl + Alt displays the numeric keyboard shortcuts.

The TI, LC, and Other Capital tabs are used to create and define named item assumptions for tenant improvements, leasing commissions and other capital, which are costs incurred by landlord associated with the leasing of space by tenants.

Note: Each capital type tab, TI, LC, and Other Capital, operates in the same manner and has the same input selection options.

TI, LC, and Other Capital named items are applicable in the following areas of the app:

• Rent Roll section > Rent Roll tab > T.I., L.C., & Other Capital columns > Named Item state
• Rent Roll & Property Market sections > Market Lease tab > T.I., L.C., & Other Capital columns > Named Item state

Info: Read about #, Code and Name throughout the Application

Tenant Capital Input Types

Tenant Capital named items may be entered in one of three carousel states: Basic, Detailed or Within Lease.

Basic TI, LC & Other Capital

Basic TI, LC & Other Capital is the default and is used to enter a single value (amount or percentage) of tenant capital (new and renewal) with named Inflation and defined Payouts.

New and Renewal are the capital amount, amount/area or percentage values as of the Analysis Begin date for new and renewal deals that are interpreted by the assigned Amt Type (the capital value to be used - New, Renewal or Weighted [based upon the Renewal Probability percentage] will depend upon the location within the application that the named item Tenant Capital is referenced). Percentages are interpreted as whole numbers (e.g., for 3%, enter "3", not ".03").

Note: Entries are required in both the New and Renewal fields even if the values are the same. If no entry is made in the Renewal field, the value will be interpreted as 0.

Amt Type interprets the New and Renewal values. Options include:

• Amt is the New or Renewal values (or weighted average thereof) expressed as an annual amount.
• Amt/Area is the New or Renewal values (or weighted average thereof) expressed as an annual amount per area.
• % of Rent is the percentage entered in the New or Renewal fields (or weighted average thereof) multiplied by the entire amount of Base Rent paid by tenant during the lease term, net of Free Rent (i.e., Rent + Rent Increases - Free Rent).
• % of Rent + Recovery is the percentage entered in the New or Renewal fields (or weighted average thereof) multiplied by the entire amount of Base Rent plus Recoveries paid by tenant during the lease term, net of Free Rent (i.e., Rent + Rent Increases - Free Rent + Recoveries - Free Recoveries).
• % of Rent: Ignore Free is the percentage entered in the New or Renewal fields (or weighted average thereof) multiplied by the entire amount of Base Rent paid by tenant during the lease term with no reduction for Free Rent (i.e., Rent + Rent Increases).
• % of Rent + Recovery: Ignore Free is the percentage entered in the New or Renewal fields (or weighted average thereof) multiplied by the entire amount of Base Rent plus Recoveries paid by tenant during the lease term, with no reduction for Free Rent or free Recoveries (i.e., Rent + Rent Increases + Recoveries).
• % of All Revenues is the percentage entered in the New or Renewal fields (or weighted average thereof) multiplied by the entire amount of Base Rent plus Recoveries plus Percentage Rent plus Tenant Miscellaneous Revenue paid by tenant during the lease term, net of all Free Rent (i.e., Rent + Rent Increases - Free Rent + Recoveries - Free Recoveries + Percentage Rent - Free Percentage Rent + Tenant Miscellaneous Revenue - Free Tenant Miscellaneous Revenue).

Note: Amt Type of "Amt/Area" for TI and Other Capital and "% of Rent" for LC are the defaults unless another Amt Type is assigned in the Property section on the Defaults tab.

Inflation is a drop-down menu of named items created and defined in the Property Market section on the Inflation tab. "*TenantCapital" is the default for TI and Other Capital, and null is the default for LC unless another is assigned in the Property section on the Defaults tab. The assigned Inflation determines how the New and Renewal capital values will grow during the analysis term in order to determine the capital amount when a lease commences.

Note: Inflation is only applicable when Amt Type is set to "Amt" or "Amt/Area."

Payout is a drop-down menu of named items created and defined in the Tenant Market section on the Payout tab. Payout determines when the tenant capital amount is paid in relation to the lease commencement date. "*CashedOut" is the default, indicating the amounts will be paid out upon commencement of the lease, unless another is assigned in the Property section on the Defaults tab.

Tenant Market - Basic TI, LC & Other Capital

Detailed TI, LC & Other Capital

Detailed TI, LC & Other Capital allows for changing, irregular tenant capital values over the analysis period by year. For example, in an improving market it might be assumed that tenant improvements required to be paid by the landlord could decrease over time.

Amt Type interprets the New and Renewal values and has options identical to the Basic state.

Inflation is a drop-down menu of named items created and defined in the Property Market section on the Inflation tab. "*TenantCapital" is the default for TI and Other Capital, and null is the default for LC unless another is assigned in the Property section on the Defaults tab. The assigned Inflation determines how the New and Renewal capital values will grow during the analysis term in order to determine the capital amount when a lease commences.

Note: Inflation is only applicable when Amt Type is set to "Amt or "Amt/Area."

Payout is a drop-down menu of named items created and defined in the Tenant Market section on the Payout tab. Payout determines when the tenant capital amount is paid in relation to the lease commencement date. "*CashedOut" is the default, indicating the amounts will be paid out upon commencement of the lease, unless another is assigned in the Property section on the Defaults tab.

Year is based from the Analysis Begin date. It is auto-incremented by 1 year as new rows are added and is read-only.

New is the TI, LC & Other Capital value for a new lease commencing in the corresponding Year as interpreted by the selected Amt Type (the capital value to be used - New or Weighted [based upon the Renewal Probability percentage] will depend upon the location within the application that the named item Tenant Capital is referenced). Percentages are interpreted as whole numbers (e.g., for 3%, enter "3", not ".03").

Renewal is the TI, LC & Other Capital value for a renewing lease commencing in the corresponding Year as interpreted by the selected Amt Type (the capital value to be used - Renewal or Weighted [based upon the Renewal Probability percentage] will depend upon the location within the application that the named item Tenant Capital is referenced). Percentages are interpreted as whole numbers (e.g., for 3%, enter "3", not ".03").

Note: Entries are required in both the New and Renewal fields even if the values are the same. If no entry is made in the Renewal field, the value will be interpreted as 0.

 adds a row beneath the current row,  deletes the current row.

Tenant Market - Detailed TI, LC & Other Capital

Note: For Amt and Amt/Area entries, "Detailed" Tenant TI, LC & Other Capital will grow at the referenced named Inflation rate commencing with the year subsequent to the final entry. For percentage entries, "Detailed" Tenant TI, LC & Other Capital will remain constant for all years subsequent to the final year of data entry.

Within Lease TI, LC & Other Capital

Within Lease TI, LC & Other Capital is used when the percentage rate changes during the lease term and typically applies to leasing commissions (e.g., new leasing commissions are 7% of year 1 Rent and 2% of Rent for all years thereafter within a lease term; renewal leasing commissions are 3% of year 1 Rent and 1% of Rent for all years thereafter within a lease term).

Amt Type interprets the New and Renewal values and has the options identical to the Basic state (with the exception that Amt and Amt/Area are not available).

Payout is a drop-down menu of named items created and defined in the Tenant Market section on the Payout tab. Payout determines when the tenant capital amount is paid in relation to the lease commencement date. "*CashedOut" is the default, indicating the amounts will be paid out upon commencement of the lease, unless another is assigned in the Property section on the Defaults tab.

Month is the month from the commencement date of the lease.

New is the TI, LC & Other Capital percentage for a new lease for the corresponding month within the lease term, as interpreted by the assigned Amt Type.

Renewal is the TI, LC & Other Capital percentage for a renewing lease for the corresponding month within the lease term, as interpreted by the assigned Amt Type.

 adds a row beneath the current row,  deletes the current row.

Tenant Market - Within Lease TI, LC & Other Capital

Note: The New and Renewal percentages carry forward until the next entry or until the expiration of the lease for the last entry. 

Note: Entries are required in both the New and Renew fields even if the values are the same. If no entry is made in the Renewal field, the value will be interpreted as 0.

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Payout

Ctrl + Alt displays the numeric keyboard shortcut.

The Payout tab is used to create and define named item payout assumptions. Payouts determine the timing of tenant improvement, lease commission and other capital payments.

Payout named items may be referenced in the following areas of the application:

• Tenant Market section > TI, LC, & Other Capital tabs > Basic, Detailed and Within Lease states
• Rent Roll and Property Market sections > Market Lease tab > T.I., L.C., & Other Capital columns > Basic state

Info: Read about #, Code and Name throughout the Application

Payout Input Types

System Payout

System is a non-editable Input Type of "*Cashed Out" (i.e., capital items are paid in month 1 of the lease term).

Additional Payout named items may be entered in one of two carousel states: Basic or Detailed.

Basic Payout

Basic Payout is used to enter a single month when 100% of the tenant capital is paid out.

Month is the month of payment relative to the commencement date of the lease. An entry of "1" is the equivalent of "*CashedOut." "0" is not an accepted Month value. Negative values (months prior to the lease commencement date) are accepted.

Tenant Market - Basic Payout

Detailed Payout

Detailed Payout is used to spread the tenant capital payments across two or more months.

Month is the month of payment relative to the commencement date of the lease. Negative values (months prior to the lease commencement date) are accepted. An entry of "1" is the equivalent of "*CashedOut" and means the payment is made in the first month of the lease. Likewise, an entry of "-1"means the payment is made in the month prior to lease commencement. "0" is not an accepted Month value.

Percent is the percentage value of the total Tenant Capital payment that is made in the corresponding month. The sum of all percentages entered must equal 100% (i.e., the entire Tenant Capital amount is paid out) and the summation of the percentage values entered is displayed at the bottom of the carousel. 50% is entered as "50", not ".50".

 adds a row beneath the current row,  deletes the current row.

Tenant Market - Detailed Payout (50% three months prior to commencement, 50% on lease commencement)