Dictionary of Real Estate Terms: excess rent
excess rent
when the rent of an existing lease exceeds the rental rate on comparable existing space. Should the lease expire or the tenant break the lease, the new rate will probably be at market rates.
Example: Two years ago the Data Intensive Corporation signed a 5-year lease on office space in downtown Metropolis at $25 per square foot. Overbuilding of office space caused the market rental rate of that space to decline to $20. The $5 paid above market rent is considered excess rent. This is part of the leased fee value, but a prospective buyer of that building should recognize that the excess rent will diminish upon lease expiration, or perhaps sooner.
