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Rent Abatement NPV Calculator
Free rent concessions have NPV. This calculator measures.
NPV of free rent
$70,757
Nominal value
$72,000
NPV discount %
1.73%
How the math works
NPV = sum of monthly rent / (1+monthly rate)^(placement+i) for each free month.
On $12k/month × 6 free months = $72k nominal. At 6% discount starting month 1: NPV ~$71k. At 6% starting month 25: NPV ~$62k. Placement matters — up-front free rent is nearly face value; deferred free rent loses 10-15% of value.
How to Use
- Enter monthly rent.
- Enter free months.
- Enter free rent placement (month from start).
- Enter discount rate %.
- Read NPV of free rent.
Frequently Asked Questions
Why calculate NPV?
Tenant and landlord both value $1 today more than $1 in year 5. Free rent up-front is more valuable to tenant than spread across lease. Landlord prefers amortized (partial each year). NPV comparison surfaces true value.
Typical concessions?
Office new lease: 1 month free per year. Lease renewal: 0.5-1 month per year. Retail: variable by market. Industrial: often short (1-3 months total). Mid-market 2024-25: 10-15% of base rent in free rent equivalent.
Alternatives?
Lump sum cash. TI allowance. Rent reduction vs free rent. Each has different accounting and cash flow profile. Tenant mixes to match cash needs; landlord offers what fits internal budget (capex for TI vs operating for free rent).
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