Consider the following two leases and calculate the effective rents for both leases from the TENANT's perspective:

Lease A:

5 years, gross with base year expense stop

Y1 rents $44/sf, increasing at 5%/year

Y1 expenses $18/sf, expected to increase at $1/sf/year

Lease B

6 years, net

Y1 rent $24/sf, increasing at 15%/per year

Y1 expenses $14.50/sf, expected to increase at $0.50/sf/year

Assume a discount rate of 6.5% for calculating effective rents.

Please simplify your and final effective rent calculation to $/s.f/yr and round your answer to two decimals.

From a pure effective rent perspective, which lease is better for the TENANT?