Free rent is one of the most common and valuable concessions available in industrial lease negotiations — but most tenants don't know how to ask for it, when to expect it, or how much to request. Here's a practical guide.
Free rent (also called a "rent abatement period") is a negotiated period at the start of your lease during which you pay no base rent. You still pay NNN expenses during this time, but the base rent — which is the bulk of your monthly cost — is waived.
On a $1.30/SF NNN lease for a 30,000 SF space, one month of free rent saves you $39,000. Three months saves $117,000. It's real money.
The amount of free rent you can negotiate depends primarily on lease term length and current market conditions:
In a tenant-favorable market (higher vacancy, slower deal flow), landlords are more generous. In a tight market like IE West, you may need to be more strategic — but free rent is still routinely available.
Tenant Improvement (TI) Allowance
The landlord contributes a dollar amount per square foot toward improvements to the space — office buildout, HVAC upgrades, dock equipment, LED lighting, etc. Common ranges in the IE: $5-$30/SF depending on lease term and building condition.
Reduced Rate in Early Months
Instead of full free rent, some landlords prefer a stepped rent structure — starting below market and ramping up over the first 12-24 months. This can be more attractive to landlords on paper while delivering similar cash savings to tenants.
Landlord-Paid Broker Commission
Always use a tenant rep. Their commission is paid by the landlord — not you — and having professional representation signals to the landlord that you're a serious, sophisticated tenant, which typically results in better terms.
Renewal Options
Negotiate the right to renew at a predetermined rate or at "fair market value with X% cap." This protects you from being priced out when your lease expires.
1. Make it part of your initial offer. Never ask for free rent as an afterthought. Include it in your Letter of Intent (LOI) from the start as a non-negotiable line item.
2. Justify it with term length. Frame free rent as compensation for committing to a longer term. "We're willing to sign a 5-year lease — we'd like 3 months of free rent in exchange for that commitment."
3. Know the landlord's situation. A vacant building that's been sitting for 60+ days is a very different negotiation than a building with two competing offers. Your tenant rep should research the landlord's situation before you make an offer.
4. Don't just take asking. Even in a tight market, most landlords have 10-20% of flexibility they won't volunteer. If you don't ask, you don't get it.
5. Let your broker lead. Experienced industrial brokers know what's been done in comparable deals in the past 90 days. That market knowledge is your leverage.
Free rent periods are sometimes "burned off" during any holdover period after your lease expires. Make sure your lease specifies that free rent is not subject to recapture and cannot be clawed back if you vacate on time.
Free rent is available in virtually every industrial lease negotiation — you just have to ask for it the right way. A good tenant rep costs you nothing (the landlord pays), knows what the market will bear, and typically recovers their value many times over in concessions alone.