Lease Incentive and Net Effective Rent Calculator
Built for Australian agents, landlords and tenants. Convert face rent plus an incentive into simple and discounted net effective rent, with rent paid monthly in advance.
Discounted net effective rent
$441.17/sqm
Rent paid monthly in advance, discounted at 7% per annum. Effective discount to face rent 37.0%.
Converting a gross incentive to a net basis holds only when outgoings stay flat across the term.
How it is calculated
Total face rent compounds the starting rate by the fixed review for every year of the term. The incentive pool is your incentive percentage of that total.
The pool splits into a fit-out contribution and a rent-free value. Simple net effective rent spreads the whole pool evenly, which matches the straight-line treatment lessors use in their accounts.
Discounted net effective rent values each monthly payment in advance at your discount rate, removes the fit-out contribution as a day-one cost, then converts the present value back to an annual rate per square metre.
Australian benchmarks
As at 23 September 2026. Benchmarks refresh quarterly.
| Market | Figure | Source |
|---|---|---|
| Melbourne CBD office, June quarter 2026 | 48.1% average; Flagstaff 55%, Docklands 53.8%, Eastern Core 39.7% | Knight Frank via commercialrealestate.com.au |
| Western Sydney industrial | Record 22%, net effective rent down 4.6% over 12 months | Knight Frank Q1 2026 |
| Melbourne prime industrial | 17.0% to 30.0% | Cushman & Wakefield Q1 2026 |
| Incentive basis by city | Sydney, Brisbane, Canberra and Adelaide quote gross; Melbourne and Perth quote net | Colliers CBD office snapshot |
Incentive levels move quarterly and by precinct. Check the basis, gross or net, before you compare two deals.
Australian rules that change the maths
Sydney, Brisbane, Canberra and Adelaide usually quote incentives on a gross rent basis, while Melbourne and Perth quote on a net basis. The basis toggle converts between the two, which holds when outgoings stay flat across the term.
AASB Interpretation 115 requires a lessor to recognise a lease incentive as a reduction of rental income on a straight-line basis over the term, so the simple figure is the book number and the discounted figure is the economic one.
Rent-free taken upfront costs a landlord more in present value terms than the same amount spread across the term. Compare both structures before you agree a deal.
Questions about this calculator
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Open calculatorGeneral information only. Every figure is an indicative estimate based on the numbers you enter and is not a valuation, financial advice or tax advice.
Track these numbers against real leases in rePrecinct.
rePrecinct keeps rents, reviews, outgoings and expiries beside every property, contact and deal, so your team works from one source of truth.
