How annual escalation compounds
A percentage escalation normally applies to the then-current scheduled rent rather than repeatedly adding the same year-one dollar amount. The tool compounds the entered rate on each lease anniversary.
- Year n rate equals the starting rate multiplied by one plus the escalation rate raised to n minus one
- Annual base rent equals the scheduled rate multiplied by rentable area
- Partial final years include only the entered number of months
- Fixed-dollar steps and CPI clauses require a different schedule
Read the full rent schedule
Cumulative base rent is more useful than a year-one shortcut when comparing terms, commissions, or occupancy budgets.
- Keep per-square-foot units consistent
- Model free rent separately from scheduled rent
- Check the exact escalation date in the lease
- Do not substitute this schedule for a lease abstract
Key takeaways
- A compounded escalation schedule applies each annual percentage increase to the prior scheduled rate.
- Annual base rent equals rentable square feet multiplied by the applicable annual rent per square foot.
- A partial lease year should be prorated by its applicable months.