In a commercial lease, a concession refers to a negotiated benefit or advantage provided by the Landlord to the Tenant. Concessions are typically offered to attract Tenants, incentivize lease agreements, or accommodate specific Tenant needs. These concessions can take various forms, and their inclusion in the lease agreement is subject to negotiation between the Landlord and Tenant. Here are some common types of concessions in a commercial lease:
Rent Abatement: This concession involves a temporary reduction or elimination of rent payments. It could be a specified number of months at the beginning of the lease term, allowing the tenant to establish their business before full rent payments commence.
Tenant Improvement Allowance: Landlords may offer a financial allowance to Tenants to cover the cost of customizing or improving the leased space according to their business needs. This can include interior renovations, signage, or other modifications.
Free Rent Period: Similar to rent abatement, a free rent period involves the tenant not making rent payments for a specific period, often at the start of the lease term. This provides the tenant with some financial relief during the initial setup phase.
Operating Expense Caps: The Landlord may cap certain operating expenses to protect the Tenant from unexpected cost increases during the lease term.
Parking Discounts or Free Parking: In properties where parking is a separate cost, Landlords may offer discounted rates or free parking spaces as a concession to Tenants.
Expansion Rights: Some leases include provisions that grant the Tenant the right to expand into adjacent or additional space in the building as their business grows, often at pre-negotiated terms.
Early Termination Options: The lease agreement may include provisions allowing the Tenant to terminate the lease early under specific conditions, providing flexibility for businesses that may need to relocate or downsize.
Concessions are valuable tools for Landlords to attract and retain Tenants, while Tenants benefit by securing favorable terms that support their business goals. The specific terms of concessions are subject to negotiation and are typically outlined in detail within the commercial lease agreement.
Getting a rent concession in your lease is like finding money in your old jeans – unexpected, delightful, and making you feel like a financial wizard who just pulled off the ultimate real estate magic trick, contact to learn how to feel like a magician.
Client Focused | Solution Driven | Commercial Realtors
