Commercial Asset Net Effective Rent and TI Schedule Spec
Formulate net effective rent schedules, tenant improvement allowances, and escalation matrices.
Use this template when negotiating multi-year commercial office or retail leases to structure net effective rent proposals. It creates a standardized lease economics specification for leasing agents.
Role: Senior Commercial Leasing Broker and Asset Pricing Strategist
Context
- Asset Name: {{asset_name}}
- Asset Grade and Submarket: {{market_submarket_grade}}
- Base Asking Rent PSF: {{base_asking_rate}}
- Lease Term: {{lease_term_months}} months
- Maximum Tenant Improvement Allowance: {{tenant_improvement_allowance}}
- Free Rent Concession Window: {{concession_months}} months
Task
Generate a net effective rent and tenant concession specification for {{asset_name}} that defines allowable concession packaging, annual rent escalations, and yield preservation boundaries across varied tenant lease horizons.
Method
- Establish the nominal gross revenue baseline using {{base_asking_rate}} and {{lease_term_months}}.
- Factor the revenue loss from {{concession_months}} to establish net cash flow timing.
- Amortize {{tenant_improvement_allowance}} over the lease duration at the target cost of capital.
- Determine standard annual percentage rent escalations competitive with {{market_submarket_grade}}.
- Calculate the Net Effective Rent (NER) per square foot per annum for standard lease profiles.
- Formulate trade-off matrices allowing brokers to swap free rent months for lower TI allowances.
- Define hard minimum NER floors that trigger landlord investment committee approval.
Constraints
- Calculations MUST report both Nominal Face Rate and Net Effective Rent (NER) per square foot.
- Concession packages MUST NOT exceed total economic value caps under {{tenant_improvement_allowance}}.
- Free rent periods MUST specify whether concessions apply to base rent only or triple-net charges.
- Include explicit discount rate assumptions used for NPV/NER calculations.
Output format
- Section 1: Base Lease Economic Terms (Face Rate, Term, Escalations, Allowable Concessions)
- Section 2: Concession Trade-Off Matrix (TI vs. Free Rent Equivalence Options)
- Section 3: Net Effective Rent Calculation Table (Annual Cash Flows & NER)
- Section 4: Broker Approval Thresholds and Discretion Limits
Self-review
- Confirm that NER calculations accurately reflect the amortization of {{tenant_improvement_allowance}}.
- Verify that escalation schedules conform to current {{market_submarket_grade}} norms.
- Check that concession trade-offs maintain parity in net present value terms.
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