What do these lease comparables support?
Normalize rent and incentives before drawing a price conclusion.
The question
Northbank Advisory is comparing invented Singapore office evidence for a client. A and B are completed leases of similar date, use and condition. The subject’s asking rent is S$510 per sq m per year; nobody has agreed that price. Compare rent-equivalent costs only, without discounting, tax, service charges or actual fit-out expenditure.
| A | B | |
|---|---|---|
| Area (sq m) | 1000 | 800 |
| Annual rent (S$/sq m) | 480 | 465 |
| Term (months) | 36 | 36 |
| Rent-free months | 3 | 1 |
The subject’s asking rent is not a completed comparable.
Average the three headline rents. This proves the subject should achieve S$485 per sq m.
“What do these lease comparables support?”
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A strong answer, step by step
Open each step in turn. This is one strong answer, not the only one.
Step 1: Which evidence belongs in the comparison?
What would you do here? Open the move you’d make.
Average all three headline prices.
Tempting, but it misses something. That mixes two completed leases with an unaccepted ask.
Use A and B after checking their lease terms.
The strong move. This uses the completed evidence on a consistent basis.
Use only the highest rent because it is recent.
Tempting, but it misses something. Both leases are described as similar in date; the high figure is not automatically more relevant.
See how a strong candidate says it
“Start with the two completed leases and verify their terms. Keep the subject’s asking price separate.”
Why it works: An unaccepted ask records the seller’s position, not an agreed market transaction.
Step 2: What is A’s equivalent rent?
What would you do here? Open the move you’d make.
A is S$440 and B is S$452.08 per sq m per year.
The strong move. These figures allow for each lease’s rent-free months.
A remains S$480 because that is its headline rent.
Tempting, but it misses something. That leaves out the three rent-free months.
A is S$40 because three months cost S$1,440.
Tempting, but it misses something. That treats the free months as the paid rent and gives the wrong annual measure.
See how a strong candidate says it
“S$480 × (36 − 3) / 36 = S$440 per sq m per year. B is S$465 × 35/36 = S$452.08.”
Why it works: Spread the paid rent across the full term before comparing the two leases.
Step 3: How should you state the result?
What would you do here? Open the move you’d make.
Guarantee the subject will achieve S$452.08.
Tempting, but it misses something. A comparable is evidence, not a guarantee of another transaction.
Report the qualified range and the costs it excludes.
The strong move. This states both what the evidence supports and its limits.
Call S$485 a completed-market average.
Tempting, but it misses something. That figure mixes unadjusted rents with an unaccepted asking price.
See how a strong candidate says it
“The two leases give rent-equivalent evidence from S$440 to S$452.08 per sq m per year. Explain remaining differences before recommending terms.”
Why it works: Two normalized comparables inform advice; they do not establish an exact valuation or the full cost of occupation.
Step 4: What changes with the side letter?
A signed side letter is now supplied. A’s landlord also paid the tenant S$30,000 as a cash fit-out contribution. No other terms change.
What would you do here? Open the move you’d make.
Deduct S$30,000 from each year’s rent per sq m.
Tempting, but it misses something. That applies a total cash contribution to the wrong unit and period.
Keep A at S$440 because the side letter is separate.
Tempting, but it misses something. The signed contribution changes this defined rent-equivalent measure.
Reduce A by S$10 per sq m per year and update the range.
The strong move. S$30,000 ÷ 1,000 sq m ÷ 3 years is S$10.
See how a strong candidate says it
“The S$30,000 contribution is S$10 per sq m per year over 1,000 sq m and three years. A becomes S$430; the evidence range becomes S$430–452.08.”
Why it works: Keep the contribution separate from actual fit-out spending so the measure remains a rent-equivalent comparison.
The answer, in short
- Decision
- Use the revised rent-equivalent range of S$430–452.08.
- Because
- The two completed leases are normalized for the incentives now evidenced.
- What would change it
- Further verified terms or differences in the properties could change the comparison.
Common traps
- Mixing asking prices with agreed leases.
- Dividing an incentive by the wrong area or period.
Check your answer
- Is the price agreed or only asked?
- Did I spread free rent over the full term?
- What costs does this measure exclude?
- Did the side letter change the evidence?
Last reviewed Nov 10, 2026