Finance category
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Free Rent Breakeven Calculator
Free rent trades with face rate. This calculator finds breakeven rate.
Equivalent rate cut $/SF
$1
Free rent value
$84,000
Effective rate $/SF
$27
How the math works
Free rent value = monthly rent × free months × SF. Equivalent rate cut = value ÷ years ÷ SF.
A rate cut looks smaller on paper than the same economic value in free rent, but both deliver identical tenant cash to lease term. Match the concession form to negotiation leverage — face-rate buyers want the free rent; cash-flow buyers want the rate cut. Same economics, different optics.
How to Use
- Enter base rent/SF.
- Enter free rent months.
- Enter lease term years.
- Enter space SF.
- Read equivalent rate discount.
Frequently Asked Questions
Why offer free rent?
Preserves face rate for comp purposes. Tenant cash-flow help in early months. Signal of commitment (often preferred to face reduction). Simpler to administer than stepped rent.
Landlord preference?
Landlords usually prefer free rent over rate cuts. Why: face rate is what gets reported in market surveys. Effective rent lower, but comp data supports valuation. Face rate preservation worth 5-10% of deal value at sale.
Tenant preference?
Tenants usually prefer rate cut (lower throughout lease) over free rent (concentrated benefit). Stronger cash flow in steady state. Choice depends on business cash flow pattern: seasonal/new businesses prefer free rent, established prefer rate.
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