Base Rent
The contractual rent for the premises before operating expense recoveries, escalations applied in later years, or concessions that change effective rent.
Definition
Base rent is the stated rental amount for the leased space, usually quoted as dollars per square foot per year (or month) before NNN charges, CAM, taxes, insurance, or utilities. In small bay industrial listings, the headline rate is almost always base rent. Total occupancy cost is base rent plus whatever expenses the lease passes through. Base rent is also the starting point for rent escalations and for calculating effective rent after free rent or other concessions. Confusing base rent with all-in occupancy cost is a common underwriting error when comparing NNN quotes to modified gross quotes.
Example
A 2,500 SF suite quotes $14.00/SF NNN base rent. Estimated NNN expenses are $3.50/SF. Year-one face occupancy cost is about $17.50/SF before utilities inside the suite. If the lease includes two months of free rent on a 36-month term, effective rent on the base component is lower than $14.00/SF even though the stated base rent stays $14.00.
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