Arizona Commercial Property Lease Rate Calculator

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Arizona Commercial Property Lease Rate Calculator

Calculate estimated commercial property lease rates in Arizona for NNN, Gross, and Modified Gross lease structures. Includes market-based adjustments for major Arizona metros and property class factors.

Rentable Square Footage (SF)

Base Asking Rate ($/SF/Year)

Lease Type

Triple Net (NNN) Full Service Gross Modified Gross

Property Class

Class A Class B Class C

Arizona Market

Phoenix Metro Scottsdale Tempe Chandler/Gilbert Tucson Mesa/East Valley Peoria/West Valley Flagstaff Other/Rural

Property Type

Office Retail Industrial/Warehouse Flex Space Medical Office

Lease Term (Months)

Estimated NNN Expenses ($/SF/Year) — for NNN/Modified leases

Annual Rent Escalation (%)

Free Rent Period (Months)

Tenant Improvement Allowance ($/SF)

Calculate Lease Rate

function ariCalc() { // --- Grab inputs --- const sqft = parseFloat(document.getElementById('ari-sqft').value); const baseRate = parseFloat(document.getElementById('ari-base-rate').value); const leaseType = document.getElementById('ari-lease-type').value; const propClass = document.getElementById('ari-property-class').value; const market = document.getElementById('ari-market').value; const propType = document.getElementById('ari-property-type').value; const leaseTerm = parseFloat(document.getElementById('ari-lease-term').value); const nnnExp = parseFloat(document.getElementById('ari-nnn-expenses').value) || 0; const escalation = parseFloat(document.getElementById('ari-annual-escalation').value) || 0; const freeRent = parseFloat(document.getElementById('ari-free-rent').value) || 0; const tiAllowance = parseFloat(document.getElementById('ari-ti-allowance').value) || 0;

const resultDiv = document.getElementById('ari-result');

// --- Validation --- const errors = []; if (isNaN(sqft) || sqft 500000) errors.push("Rentable square footage must be between 100 and 500,000 SF."); if (isNaN(baseRate) || baseRate 200) errors.push("Base asking rate must be between $1 and $200 per SF/year."); if (isNaN(leaseTerm) || leaseTerm 240) errors.push("Lease term must be between 1 and 240 months."); if (nnnExp 50) errors.push("NNN expenses must be between $0 and $50 per SF/year."); if (escalation 20) errors.push("Annual escalation must be between 0% and 20%."); if (freeRent 24) errors.push("Free rent period must be between 0 and 24 months."); if (tiAllowance 300) errors.push("TI allowance must be between $0 and $300 per SF."); if (freeRent >= leaseTerm) errors.push("Free rent period must be less than the total lease term.");

if (errors.length > 0) { resultDiv.style.display = 'block'; resultDiv.innerHTML = 'Please fix the following:' + errors.map(e => '').join('') + ''; return; }

// --------------------------------------------------------------- // MARKET ADJUSTMENT FACTORS // Source: CoStar / CBRE Arizona Market Reports 2023-2024 // --------------------------------------------------------------- const marketFactors = { phoenix: 1.00, scottsdale: 1.18, tempe: 1.08, chandler: 1.05, tucson: 0.82, mesa: 0.95, peoria: 0.90, flagstaff: 0.88, other: 0.75 };

// --------------------------------------------------------------- // PROPERTY CLASS ADJUSTMENT FACTORS // --------------------------------------------------------------- const classFactors = { a: 1.00, b: 0.82, c: 0.65 };

// --------------------------------------------------------------- // PROPERTY TYPE ADJUSTMENT FACTORS // (relative to office baseline within each market) // --------------------------------------------------------------- const typeFactors = { office: 1.00, retail: 1.12, industrial: 0.68, flex: 0.80, medical: 1.25 };

// --------------------------------------------------------------- // LEASE TYPE: NNN EXPENSE LOAD FACTORS // For Gross leases, landlord absorbs operating expenses. // For Modified Gross, tenant pays a portion (50% of NNN). // --------------------------------------------------------------- const leaseTypeExpenseLoad = { nnn: 0.00, // tenant pays all NNN on top of base gross: 1.00, // landlord absorbs all NNN into rate modified: 0.50 // landlord absorbs 50% of NNN };

// --------------------------------------------------------------- // STEP 1: Adjusted Base Rate // Adjusted Rate = Base Rate × Market Factor × Class Factor × Type Factor // --------------------------------------------------------------- const mf = marketFactors[market]; const cf = classFactors[propClass]; const tf = typeFactors[propType]; const adjustedBaseRate = baseRate * mf * cf * tf;

// --------------------------------------------------------------- // STEP 2: Effective Gross Rate (what tenant actually pays all-in) // For NNN: Effective = Adjusted Base Rate + NNN Expenses // For Gross: Effective = Adjusted Base Rate (NNN already loaded) // For Modified: Effective = Adjusted Base Rate + (NNN × 0.50) // --------------------------------------------------------------- const expLoad = leaseTypeExpenseLoad[leaseType]; const effectiveAnnualRate = adjustedBaseRate + (nnnExp * (1 - expLoad));

// --------------------------------------------------------------- // STEP 3: Monthly Base Rent (Year 1) // Monthly Rent = (Adjusted Base Rate × SF) / 12 // --------------------------------------------------------------- const monthlyBaseRent = (adjustedBaseRate * sqft) / 12; const monthlyEffectiveRent = (effectiveAnnualRate * sqft) / 12;

// --------------------------------------------------------------- // STEP 4: Total Lease Value with Annual Escalations // Uses compound escalation per lease year: // Year n Rent = Annual Base Rent × (1 + escalation/100)^(n-1) // Total = Σ [Year n Annual Rent] for each full/partial year // --------------------------------------------------------------- const leaseTermYears = leaseTerm / 12; let totalBaseRent = 0; let totalEffectiveRent = 0; const annualBaseRentYear1 = adjustedBaseRate * sqft; const annualEffectiveRentYear1 = effectiveAnnualRate * sqft; const escRate = escalation / 100;

// Build year-by-year schedule const schedule = []; let remainingMonths = leaseTerm; let yearNum = 1;

while (remainingMonths > 0) { const monthsThisYear = Math.min(12, remainingMonths); const yearFraction = monthsThisYear / 12; const escalFactor = Math.pow(1 + escRate, yearNum - 1); const yearBaseRent = annualBaseRentYear1 * escalFactor * yearFraction; const yearEffRent = annualEffectiveRentYear1 * escalFactor * yearFraction; const monthlyBase = (annualBaseRentYear1 * escalFactor) / 12; const monthlyEff = (annualEffectiveRentYear1 * escalFactor) / 12;

schedule.push({ year: yearNum, months: monthsThisYear, escalFactor: escalFactor, ratePerSF: adjustedBaseRate * escalFactor, effectiveRatePerSF: effectiveAnnualRate * escalFactor, monthlyBase: monthlyBase, monthlyEff: monthlyEff, annualBase: yearBaseRent, annualEff: yearEffRent });

totalBaseRent += yearBaseRent; totalEffectiveRent += yearEffRent; remainingMonths -= monthsThisYear; yearNum++; }

// --------------------------------------------------------------- // STEP 5: Free Rent Abatement // Free Rent Value = Monthly Effective Rent (Year 1) × Free Rent Months // --------------------------------------------------------------- const freeRentValue = monthlyEffectiveRent * freeRent; const netTotalEffectiveRent = totalEffectiveRent - freeRentValue;

// --------------------------------------------------------------- // STEP 6: Net Effective Rate (NER) // NER = Net Total Effective Rent / (SF × Lease Term in Years) // Accounts for free rent and TI amortization // --------------------------------------------------------------- const nerPerSFPerYear = netTotalEffectiveRent / (sqft * leaseTermYears);

// --------------------------------------------------------------- // STEP 7: TI Amortization Impact on NER // TI Amortized Monthly = (TI/SF × SF) / Lease Term Months // Landlord recoups TI through rent; reduces net effective value // --------------------------------------------------------------- const totalTI = tiAllowance * sqft; const tiMonthlyAmort = totalTI / leaseTerm; const tiAnnualAmort = tiMonthlyAmort * 12; const tiPerSFPerYear = tiAllowance / leaseTermYears;

// Landlord Net Effective Rate (after TI cost) const landlordNER = nerPerSFPerYear - tiPerSFPerYear;

// --------------------------------------------------------------- // STEP 8: Arizona Transaction Privilege Tax (TPT) // AZ commercial lease TPT: State 5.6% + avg county ~0.7% + avg city ~2.0% // Phoenix city rate: 2.3% | Scottsdale: 1.75% | Tucson: 2.6% // --------------------------------------------------------------- const cityTPT = { phoenix: 0.023, scottsdale: 0.0175, tempe: 0.018, chandler: 0.015, tucson: 0.026, mesa: 0.02, peoria: 0.018, flagstaff: 0.0215, other: 0.02 }; const stateTaxRate = 0.056; const countyTaxRate = 0.007; const cityTaxRate = cityTPT[market]; const totalTPTRate = stateTaxRate + countyTaxRate + cityTaxRate; const monthlyTPT = monthlyEffectiveRent * totalTPTRate; const annualTPT = monthlyTPT * 12;

// --------------------------------------------------------------- // FORMATTING HELPERS // --------------------------------------------------------------- const fmt = (n) => '$' + n.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ','); const fmtN = (n) => n.toFixed(2).replace(/\B(?=(\d{3})+(?!\d))/g, ','); const pct = (n) => (n * 100).toFixed(2) + '%';

const leaseTypeLabel = { nnn: 'Triple Net (NNN)', gross: 'Full Service Gross', modified: 'Modified Gross' }; const classLabel = { a: 'Class A', b: 'Class B', c: 'Class C' }; const marketLabel = { phoenix:'Phoenix Metro', scottsdale:'Scottsdale', tempe:'Tempe', chandler:'Chandler/Gilbert', tucson:'Tucson', mesa:'Mesa/East Valley', peoria:'Peoria/West Valley', flagstaff:'Flagstaff', other:'Other/Rural' }; const typeLabel = { office:'Office', retail:'Retail', industrial:'Industrial/Warehouse', flex:'Flex Space', medical:'Medical Office' };

// --------------------------------------------------------------- // BUILD SCHEDULE TABLE // --------------------------------------------------------------- let scheduleRows = ''; schedule.forEach(row => { scheduleRows += Year ${row.year} (${row.months} mo.) ${fmt(row.ratePerSF)}/SF/yr ${fmt(row.effectiveRatePerSF)}/SF/yr ${fmt(row.monthlyBase)}/mo ${fmt(row.monthlyEff)}/mo ${fmt(row.annualEff)}; });

// --------------------------------------------------------------- // OUTPUT // --------------------------------------------------------------- resultDiv.style.display = 'block'; resultDiv.innerHTML = ` ### Arizona Commercial Lease Rate Summary

Property & Lease Details Market${marketLabel[market]} Property Type${typeLabel[propType]} Property Class${classLabel[propClass]} Lease Type${leaseTypeLabel[leaseType]} Rentable SF${sqft.toLocaleString()} SF Lease Term${leaseTerm} months (${fmtN(leaseTermYears)} years)

Rate Adjustments Input Base Rate${fmt(baseRate)}/SF/yr Market Factor (${marketLabel[market]})× ${mf.toFixed(2)} Class Factor (${classLabel[propClass]})× ${cf.toFixed(2)} Type Factor (${typeLabel[propType]})× ${tf.toFixed(2)} Adjusted Base Rate (Year 1)${fmt(adjustedBaseRate)}/SF/yr NNN Expenses (tenant portion)${fmt(nnnExp * (1 - expLoad))}/SF/yr Effective All-In Rate (Year 1)${fmt(effectiveAnnualRate)}/SF/yr

Monthly & Annual Costs (Year 1) Monthly Base Rent${fmt(monthlyBaseRent)}/month Monthly NNN Expenses (tenant)${fmt((nnnExp * (1 - expLoad) * sqft) / 12)}/month Monthly Effective Rent (all-in)${fmt(monthlyEffectiveRent)}/month AZ TPT (${pct(totalTPTRate)} total)${fmt(monthlyTPT)}/month Monthly Total w/ TPT${fmt(monthlyEffectiveRent + monthlyTPT)}/month Annual Effective Rent (Year 1)${fmt(annualEffectiveRentYear1)} Annual TPT${fmt(annualTPT)}

Period Base Rate/SF Eff. Rate/SF Monthly Base Monthly All-In Annual All-In

${scheduleRows}

Total Lease Economics Gross Total Base Rent${fmt(totalBaseRent)} Gross Total Effective Rent${fmt(totalEffectiveRent)} Free Rent Abatement (${freeRent} mo.)− ${fmt(freeRentValue)} Net Total Effective Rent${fmt(netTotalEffectiveRent)} Tenant Improvement Allowance${fmt(totalTI)} (${fmt(tiAllowance)}/SF) TI Amortized (monthly)${fmt(tiMonthlyAmort)}/month Net Effective Rate (Tenant)${fmt(nerPerSFPerYear)}/SF/yr Landlord NER (after TI cost)${fmt(landlordNER)}/SF/yr Total AZ TPT Over Lease Term${fmt(annualTPT * leaseTermYears)}

`; }

#### Formulas Used

1. Adjusted Base Rate: Adjusted Rate ($/SF/yr) = Base Rate × Market Factor × Class Factor × Property Type Factor

2. Effective All-In Rate: • NNN: Effective Rate = Adjusted Base Rate + NNN Expenses (tenant pays all operating costs) • Full Service Gross: Effective Rate = Adjusted Base Rate (landlord absorbs all NNN) • Modified Gross: Effective Rate = Adjusted Base Rate + (NNN Expenses × 0.50)

3. Monthly Rent: Monthly Rent = (Effective Rate × Rentable SF) / 12

4. Annual Escalation (Compound): Year n Rate = Year 1 Rate × (1 + Escalation%)^(n−1)

5. Total Lease Value: Total = Σ [Annual Effective Rent × Year Fraction] for each lease year

6. Net Effective Rate (NER): NER = (Total Effective Rent − Free Rent Value) / (SF × Lease Term in Years)

7. Landlord NER: Landlord NER = Tenant NER − (TI Allowance $/SF / Lease Term Years)

8. Arizona Transaction Privilege Tax (TPT): Total TPT Rate = State (5.6%) + County (~0.7%) + City (1.5%–2.6% by market) Monthly TPT = Monthly Effective Rent × Total TPT Rate

#### Assumptions & References

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