Free tool
Rent escalation schedule builder
Model a lease term with fixed-percent, fixed-amount, or CPI escalations, with floors and caps, and see total rent and average rate.
Rent schedule
Year-by-year across the term.
| Year | Rate/sf | Annual rent |
|---|---|---|
| Year 1Base year | $28.50 | $353,400 |
| Year 2+3% fixed | $29.36 | $364,002 |
| Year 3+3% fixed | $30.24 | $374,922 |
| Year 4+3% fixed | $31.14 | $386,170 |
| Year 5+3% fixed | $32.08 | $397,755 |
CPI figures are an assumption, not a forecast. Actual escalations depend on the published series and the comparison period the lease specifies.
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Modeling escalations before you sign
The starting rate is the number everyone negotiates and the escalation is the number that determines what the deal actually costs. Over a ten-year term, the difference between a 2.5% and a 3.5% annual escalation is larger than most starting-rate concessions.
Total rent over the term and the average rate per square foot are the two figures worth comparing across competing proposals. A lower starting rate with a steeper escalation frequently loses to a higher rate that escalates slowly.
Questions
Do fixed-percent escalations compound?
Almost always, yes. A 3% annual escalation applies to the prior year’s rate, not the original one, so a $28.50 starting rate reaches about $32.08 by year five rather than $32.78 under simple interest. This calculator compounds.
How do floors and caps work on a CPI escalation?
The published index change is computed first, then clamped. If CPI comes in at 4.6% against a 4% cap, the increase bills at 4%. If it comes in at 1.2% against a 2% floor, it bills at 2%. Many leases carry both, which turns a CPI clause into a narrow band rather than true index tracking.
What is the difference between a fixed-amount and fixed-percent escalation?
A fixed-percent escalation grows with the rate and therefore accelerates in absolute terms each year. A fixed-amount escalation adds the same dollar figure per square foot every year, which means its effective percentage shrinks as the rate rises. Over a long term the two diverge substantially.
Does this account for free rent or tenant improvement allowances?
No. This builds the gross rent schedule only. Free rent periods and TI allowances change effective rent significantly and should be modeled separately when comparing deals.
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