Can a landlord raise rents now that the tenant's tax burden is eliminated?
In competitive submarkets with vacancy rates below 5%, landlords have meaningful leverage to capture a portion of the tenant's tax savings through base rent increases. This "capture" strategy directly increases Net Operating Income and therefore property value. The formula: Value increase = Change in NOI divided by Cap Rate. For example, a $15,000 NOI increase at a 6.0% cap rate adds $250,000 in market value to the property. The key is structuring the increase so the tenant still realizes a net savings compared to their prior all-in cost, creating a win-win dynamic.