Fair Market Rent Estimates
Walter Duke + Partners is a business consulting firm that specializes in determining the fair market rent for commercial properties. We are often called upon by landlords and tenants to help negotiate lease renewals.
Case Study: Retail Center Ground Lease Mediation
6 Factors That Impact Fair Market Rent
Although a successful renewal strategy is tailored based upon the building’s situation as well as internal objectives, there are six key elements that impact fair market rent:
- Lease Terms – there must be a clear understanding of both positive and negative lease provisions and clauses as well as the term of the lease itself. All can dramatically impact fair market rent and ultimately asset value.
- Competitive Market Position – proper estimation of fair market rent hinges upon the ability to understand the issues and implications of the building’s current situation, including ownership profile and their financial objectives, building debt, tenant profile including credit, rate, and rollover, and the market perspective.
- Market Conditions – is the market soft? Are rental rates declining or trending upward? Are external market conditions favorable to the tenant or landlord?
- Tenant Improvements – tenant improvements can be very expensive and have a direct impact on achievable rental rates. What are current costs? What are typical allowances in the primary market area?
- Parking – as office usage changes and parking becomes even more critical Walter Duke + Partners helps their clients understand the impact of parking on achievable market rent.
- Signage – the cost and value of proper signage or lack thereof can have a dramatic impact on fair market rent.
Credible Market Research is Key for Tenant or Landlord Representation of Fair Market Rent
The process of determining market rent is a complex one, with many factors to consider. To help our clients assess current conditions and whether or not those will impact their value in comparison to future ones we provide them search services that include analysis over time on growth rates as well changes within various markets around the country.