The direct answer
Weighted average lease term (WALT) summarizes remaining contractual lease duration across tenants, weighted by a chosen measure such as base rent or leased area. Rent-weighted WALT is the sum of each lease’s remaining years times its rent weight divided by total included rent.
Choose weights that fit the decision
Rent-weighted WALT emphasizes cash-flow exposure, while area-weighted WALT emphasizes physical-space rollover. Report the basis to avoid ambiguous comparisons.
To apply the approach to an editable scenario, use the Commercial Real Estate Investment Calculator. For the neighboring question, explore Commercial Rent Calculator.
Calculate the remaining term
Use measurement date and enforceable expiration dates. Early termination rights, options and breaks should be analyzed separately rather than silently assumed exercised.
Pair WALT with the expiration schedule
A high WALT can coexist with one large near-term tenant expiration; detailed lease rollover remains essential.
Worked example
A property with $100,000 annual rent remaining for two years and $300,000 remaining for six years has rent-weighted WALT of (100,000×2 + 300,000×6)/400,000 = five years.
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Common mistakes and limitations
Do not confuse WALT with the simple average of lease terms or present it without naming the rent- or area-weighting method.
Does not calculate commercial loan terms, taxes or future sale value unless supplied in an optional scenario mode.
Frequently asked questions
Does WALT predict vacancy?
No. It summarizes contractual term and does not forecast tenant defaults or renewal decisions.
Should options be counted in WALT?
Only under a clearly explained convention; unexercised options should not be treated as certain.
Sources and further reading
The article’s examples are illustrative arithmetic. The references below provide context for operating, valuation or transaction concepts; they do not endorse the assumptions or the calculator.
- Office of the Comptroller of the Currency — Comptroller's Handbook — Commercial Real Estate LendingNOI, direct capitalization, cap-rate valuation and DCF concepts for commercial real estate.
- Appraisal Institute — Basic Formulas — Income CapitalizationIncome/cap-rate/value relationships, gross income multiplier and debt-coverage formula references.
Read our editorial policy for the scope of these educational methods.