Deal Economics
Face rent lies. Net effective rent doesn't.
Free rent, TI allowance and escalation structure can swing a deal's real value by 20% or more. Every LOI should be compared on net effective rent over the term, not on the headline number.
Insights
Owner guidance for the Northern Virginia commercial market.
Practical thinking on deal economics, recoveries, retention and capital planning — the decisions that actually move NOI and valuation.
Recoveries
Where CAM recovery quietly leaks
Base year gross-ups, expense caps, exclusions and vacancy adjustments are applied lease by lease. Portfolio-average math is how owners under-recover six figures without noticing.
Retention
The true cost of losing a commercial tenant
Downtime plus TI plus commissions plus marketing routinely exceeds two years of the increase you were holding out for. Model the renewal against replacement, not against market rent alone.
Capital Planning
Roofs and RTUs on a schedule, not a surprise
Building systems have known service lives. Funding replacement over a reserve horizon protects both cash flow and the cap rate a buyer will apply at exit.
Submarkets
Tysons, Reston, Loudoun: three different tenants
Credit profile, parking demand, power and clear-height requirements and TI expectations differ sharply. Comparables must come from your submarket and product type, not the county.
Operations
Operating expense per square foot is a valuation input
Every recurring dollar removed from controllable expense adds capitalized value. Contract re-bidding, utility benchmarking and preventative maintenance are asset strategy, not chores.
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