Market rent valuation advice for leases that matter.
Market rent assessments and determinations for landlords, tenants and advisers across commercial, retail and specialised property. We examine the lease terms, the premises and comparable rental evidence so the conclusion can be understood and tested.
What is market rent?
‘Market rent’ is defined by the International Valuation Standards Council (IVSC) as “the estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.” When reviewing market rent, the lease terms are central to the answer: incentives, rent-free periods, outgoings, fit-out, permitted use and measurement basis can make a headline rate per square metre misleading. A formal retail lease determination must also address the review clause and applicable state law.
When clients need market rent advice
Lease reviews
An existing lease calls for rent to be reviewed to market. We interpret the review provisions and analyse comparable lettings.
Negotiation and disputes
Landlords and tenants use an independent assessment to test proposals, negotiate terms or prepare for a formal dispute.
Trade related property
Hotels, service stations and other trade related assets may require trading analysis as well as rental comparables. We test sustainable rent against a reasonably efficient operator’s maintainable turnover and profit.
What our valuers test
We reconcile the leasing evidence to the property being valued and state the assumptions that affect the result.
- Lease clauses, review date and permitted use
- Incentives, rent free periods and fit out contributions
- Recoverable outgoings and gross or net rental basis
- Area, measurement convention and comparable units
- Location, frontage, condition and accessibility
- Trading potential where the market prices that feature
From enquiry to a reasoned report.
A clear scope at the outset, evidence suited to the asset and a conclusion you can follow.
Scope
We review the lease, property and valuation date, then confirm the engagement and fee.
Research
We inspect where required and analyse recent leases against the subject terms.
Report
We issue a reasoned conclusion and remain available to explain it or support a determination.
Questions we’re asked.
Speak with a valuer if your matter needs a more specific answer.
Is market rent the same as the rent currently paid?
No. Passing rent is the amount under the current lease. Market rent is assessed at the relevant date on the applicable lease terms, using market evidence.
Do incentives and outgoings affect the comparison?
Yes. An effective rent analysis can account for incentives, rent free periods and the allocation of outgoings so transactions are compared on a consistent basis.
Can you act in a retail lease dispute?
We prepare advice for negotiation and can act in an appointed determination where the engagement and relevant state legislation permit it.
What information do you need?
Typically the lease and variations, plans or measured areas, outgoings, tenancy details, review notice and any relevant rental evidence.
Discuss the rent before the review becomes a dispute.
Send us the property, lease, review date and any deadline. We will confirm the scope, fee and timeframe.