Finance category
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Free Rent Equivalent Calculator
Free rent concessions are landlord-tenant tools used to bridge market-asking-rent gaps without lowering the headline rate. This calculator converts free months into an effective per-SF annual rate reduction — letting tenants compare offers with different concession structures and letting landlords price concessions against their NOI impact.
Total free rent value
$160,000
Free rent value / SF
$16.00
Equivalent rate reduction / SF / yr
$2.29
Monthly rent (full)
$26,667
How the math works
Free rent equivalent translates concession months into an effective per-SF rent reduction. 6 months free on an 84-month, $32/SF lease equals about $2.29/SF/year reduction — useful for tenants comparing offers and for landlords pricing concessions.
Free rent costs landlords two ways: lost cash flow during the abatement and reduced cap-rate value (since stabilized NOI is lower).
How to Use
- Enter free rent months and base rent/SF.
- Enter total lease term in months and tenant SF.
- Read total free rent value, per-SF concession, and equivalent rate reduction.
Frequently Asked Questions
Front-loaded vs distributed free rent?
Front-loaded (months 1-6 free) is most common — gives tenant time to build out and ramp. Distributed (1 month/year free) flattens cash flow but is rarer.
Does free rent count for percentage rent?
Free rent abates only base rent; percentage rent on sales is unaffected unless lease specifies otherwise.
How does it affect cap rate?
Lenders and buyers underwrite stabilized NOI, so concessions amortized over the term reduce going-in NOI and asset value.
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