You are representing a marketing firm who is looking for a 5-year, 10,000 SF office lease and have negotiated 2 good options. Calculate the Net Effective Rent for both options and determine the best option for your client based on NER. Option A: Base rent $25/SF increasing $1/SF every year, 6 months free rent and $10/SF in Tenant Improvement Allowance Option B: Base rent $26/SF flat, no free rent, $15/SF in Tenant Improvement Allowance For both leases, assume the following:

Rent begins in Year 1

TI allowances are paid in Year 0

Free rent occurs in Year 1

Rent is paid annually at the end of each year

12% annual discount rate

What is the Net Effective Rent for Option A? ($)

What is the Net Effective Rent for Option B? ($)

Which option is best for your client?