Underwrite an office building lease by lease: tie the rent roll to the leases, schedule every expiration, price what it costs to re-lease each space (tenant improvements, commissions, free rent and downtime), test true occupancy, and only then cap a stated NOI. Lease-by-lease cash flow software fits long, complex rent rolls best; Titleman fits a first full underwriting of a deal or loan request from the address and documents, in live Excel.
Updated 19 October 2026. Published by Titleman, which makes one of the tools compared.
Five questions that decide an office deal
1. Who leaves, and when? Build a rollover schedule by year, by area and by rent, and mark the largest window (tracking lease rollover). Check termination and contraction options; they move expirations earlier.
2. What does each vacancy cost to fill? In office, re-leasing cost is often larger than a year of rent, and first-pass models understate it.
3. Is the space really used? A tenant that pays rent but has put its floor up for sublease is a likely move-out at expiry. Ask about subleases and parking use.
4. Do the recoveries hold? Compare the expense stops or base years in the leases with the T-12.
5. What does the building need? Lobby, elevators, HVAC, roof and the amenities tenants now expect.
A worked re-leasing example
For example, an illustrative 20,000 square foot suite expires in year two. Market rent is 32 dollars per square foot full service, or 640,000 dollars a year. Filling it on a new 7-year lease might cost:
| Item | Assumption | Cost (dollars) |
|---|---|---|
| Tenant improvements | 55 per sq ft | 1,100,000 |
| Leasing commissions | 6% of 7 years of rent | 268,800 |
| Free rent | 7 months | 373,333 |
| Downtime before the new lease | 9 months of lost rent | 480,000 |
| Total | about 111 per sq ft | 2,222,133 |
That is about 3.5 years of the suite's rent spent to keep it earning. Put these costs in the cash flow in the year they fall, not in a flat reserve.
Where the documents mislead
- Rent roll vs leases: options, free rent periods and side letters often sit only in the lease (how to read a rent roll, lease abstraction for acquisitions).
- OM pro forma: compare with in-place NOI.
- Cap rate: office sales evidence can be thin, so state the evidence behind the exit cap.
Tools, honestly
| Option | Best for | What it does | Where it stops | Pricing model |
|---|---|---|---|---|
| Lease-by-lease cash flow software | Multi-tenant towers, long holds | Models each lease's rent, recoveries, renewals and costs | Inputs loaded and maintained by an analyst | Software license |
| Spreadsheet | Small buildings | A rollover table and pro forma | Lease terms keyed by hand | Staff time |
| Titleman | First full underwriting on a deal or loan request | Reads the rent roll, T-12 and OM, checks them against each other and the market, builds live Excel | Not a portfolio leasing tracker | Per run; terms on a demo |
Where Titleman fits
Titleman's underwriting took about 58 minutes at the median on production runs in the 30 days to 18 October 2026, and returns a memo plus a live Excel model with a 10-year pro forma, DSCR, debt yield and sensitivity grids. Name your re-leasing assumptions in the brief; gaps are named. The category in depth: AI real estate underwriting software. Request a demo.
FAQ
What is the biggest risk in office underwriting?
Rollover combined with re-leasing cost. A large expiration in the hold period, with tenant improvements, commissions, free rent and downtime, can take years of rent to fill.
How do I estimate tenant improvement costs?
Use recent leases in the building and submarket, split between new and renewal deals; renewals usually cost less.
What is WALT and why does it matter?
Weighted average lease term: remaining lease years weighted by rent or area. A short WALT means income resets soon, so the value rests more on market rent and re-leasing cost.
Can Titleman model each office lease?
It reads the rent roll and documents inside an underwriting run and builds the model in live Excel. For maintaining detailed lease-by-lease cash flows across a long hold, lease-by-lease cash flow software fits better.