What is the difference between market rent and contract rent referred to as?

The difference between market rent and contract rent is referred to as deficit rent. This term illustrates a situation where the actual rent being charged (contract rent) is lower than the rent that could potentially be achieved in the open market (market rent). In other words, if a property is leased for less than what similar properties in the area are commanding, the shortfall is classified as deficit rent.

Understanding this concept is important for assessors and property managers because it can influence property valuation, investment decisions, and the overall financial performance of real estate assets. The identification of deficit rent can prompt strategic actions, such as renegotiating leases or adjusting rental strategies to better align with current market conditions.