The 2026 median free-rent period on Class A office leases across the top 25 US metros is 4.2 months on a 60-month deal, up from 1.8 months pre-2020 per Cushman & Wakefield Marketbeat Q1 2026. Soft markets (San Francisco Class A, downtown Seattle, Houston Energy Corridor, Portland CBD) are delivering 9 to 14 months. Tight markets (Miami Brickell, Nashville, Boston Cambridge) hold near 2 to 4 months.
TL;DR
Free rent (also called "rent abatement") is the portion of the lease term during which the tenant pays no base rent. It's the highest-impact concession tenants get in soft markets and a critical cash-flow lever during buildout. The 2026 median is 4.2 months on a 60-month Class A office lease per Cushman & Wakefield. Free rent typically only abates base rent (NNN/CAM keep ticking); negotiate to extend abatement to NNN if the market supports it. Always front-load free rent rather than spread it across the term, the cash-flow value is materially higher.
Why landlords give free rent (and not equivalent rent reduction)
Three reasons free rent is more valuable to landlords than equivalent base-rent reduction:
- Preserves headline rent for the building's deal comp. The "rent at this building" benchmark stays high for next deal negotiation.
- Preserves landlord's loan covenants. Many landlord loans include "minimum effective rent" covenants that would be tripped by base-rent reduction but not by free-rent abatement.
- Preserves the broker commission base. Most tenant-rep commissions are calculated on gross rent before abatement. Free rent gives the same effective deal to the tenant without trimming the broker payout.
Result: in soft markets, landlords prefer to give 6 to 12 months free rather than reduce base rent by an economically equivalent amount. Tenants who insist on base-rent reduction often leave 1 to 3 months of free rent on the table.
Free rent vs base-rent reduction: cash flow comparison
Two structurally equivalent deals on a 5-year, 5,000 SF lease at $50/SF asking rent:
Deal A: 6 months free
- Year 1 base rent: $250,000 × 6/12 = $125,000
- Year 2 to 5 base rent: $1,000,000
- Total base rent: $1,125,000
Deal B: $4.50/SF rent reduction with no free rent
- Year 1 base rent: $227,500 (5,000 × $45.50)
- Year 2 to 5 base rent: $910,000
- Total base rent: $1,137,500
The headline numbers look close. But Deal A puts $125,000 in tenant cash flow during year 1 buildout, when cash is most constrained. Deal B spreads the savings evenly across years 1 to 5. For a tenant managing through buildout, Deal A is materially more valuable.
We believe free rent is more valuable to tenants than equivalent base-rent reduction. Front-load whenever possible.
How to calculate the value of free rent
The annualized value of free rent in your TCO model:
Free rent value (PV) = (months free / 12) × annual base rent × discount factor
Where discount factor depends on whether free rent is front-loaded (most valuable) or spread (less valuable).
Front-loaded 6 months free at $50/SF on 5,000 SF = $125,000 nominal value. Net present value at 7% discount rate: roughly $116,000 because front-loaded benefits are discounted less.
Spread 6 months across 5 years (1.2 months/year): same $125,000 nominal but PV roughly $108,000 because the savings come later.
Always negotiate front-loaded free rent.
Free rent abatement on NNN charges
Standard free rent abates only the base rent, not NNN/CAM. During the abatement period, the tenant still pays property tax, insurance, structural maintenance, and CAM as pass-throughs.
In soft markets (Q1 2026), tenants are increasingly negotiating to extend abatement to NNN. Per Cushman & Wakefield's free rent guide, this is becoming common in 2024 to 2026 soft markets, particularly SF Class A and downtown Seattle.
If your market is tight (Miami Brickell, Nashville), don't expect NNN abatement. If your market is soft, negotiate it.
Free rent benchmarks by metro (Q1 2026)
| Metro | Class A office free rent (60-month deal) | Notes |
|---|---|---|
| San Francisco | 9 to 14 months | SF Class A vacancy 31.2% |
| Portland CBD | 9 to 14 months | Vacancy 27.8% |
| Downtown Seattle | 8 to 12 months | Bellevue tighter at 4 to 6 months |
| Houston Energy Corridor | 9 to 14 months | Oil sector consolidation |
| Chicago Loop | 6 to 10 months | Vacancy 26.4% |
| Manhattan (Class A blended) | 4 to 8 months | Trophy tighter, Class B/C softer |
| Los Angeles (Westside) | 4 to 7 months | Century City tighter |
| Austin downtown | 5 to 8 months | Digesting 2022-2024 build pipeline |
| Atlanta Midtown | 4 to 6 months | |
| Dallas Plano | 3 to 5 months | Plano tighter than Dallas downtown |
| Denver | 4 to 7 months | |
| Miami Brickell | 2 to 4 months | Vacancy 14.9%, Q1 2026 tightest |
| Nashville Gulch | 2 to 4 months | Vacancy 19.4% |
| Boston Cambridge | 2 to 4 months | Lab demand tight; office softer |
| Tampa Water Street | 2 to 4 months | Vacancy 17.9% |
Sources for benchmarks: per-metro Q1 2026 brokerage Marketbeat reports cited in our metros pages.
How to ask for free rent
The right framing in your LOI counter-offer:
Don't say: "We'd like more free rent."
Do say: "Based on Q1 2026 market data showing X months free as the median for [submarket] Class A 60-month deals, we propose [target] months free abatement of base rent, structured as months 1 through [N] of the lease term."
The market-data anchor and the structural specificity ("front-loaded months 1 through N") signal that you've done the homework. Landlords respond differently to specific asks vs vague asks.
The trap: spreading free rent across the term
Landlords sometimes counter "more total months but spread across the term" instead of front-loaded. Example: 8 months total, 4 in year 1 and 1 per year in years 2 to 5.
This is mathematically more total months but less valuable in PV terms because year 4 to 5 abatement is heavily discounted. Always insist on front-loaded structure.
Free rent and broker commission
Most tenant broker commissions are calculated on gross rent before abatement. Meaning: even with 6 months free, the broker's commission is calculated on the full 60 months of base rent, not 54.
This is one reason landlords prefer free rent over base-rent reduction, the broker payout stays whole. It's a negotiable point: some leases compute commission on effective rent net of abatement. Not common but possible.
Frequently asked questions
How many months of free rent should I ask for?
The 2026 median on a 60-month Class A office lease is 4.2 months free per Cushman & Wakefield Marketbeat. Adjust by market vacancy: SF Class A and downtown Seattle have been delivering 9 to 14 months, while Miami Brickell delivers 2 to 4. Ask for one month free per year of term as a baseline.
Do free-rent months apply to NNN charges too?
Usually not. Free rent typically only abates base rent; tenants still pay NNN/CAM during the abatement period. Negotiate to extend abatement to NNN if the market is soft (SF, Portland, downtown Seattle, Houston Energy Corridor in Q1 2026).
Can free rent be spread across the term instead of front-loaded?
Yes, but front-loaded is more valuable to tenants because it offsets buildout-period cash burn. Landlords prefer to spread it because it preserves the headline base-rent number. Always insist on front-loaded structure.
How do free-rent months affect the tenant broker's commission?
Most tenant broker commissions are calculated on gross rent before abatement, meaning the broker still earns on free-rent months. This is a negotiable point; some deals compute commission on effective rent net of abatement, but it's not standard.
Is free rent taxable income to the tenant?
No. Free rent reduces the leasehold's effective rent and does not generate taxable income. Tax treatment of TI is more nuanced; see your CPA. For free rent specifically, no income event.
What's the typical free rent in 2026 vs pre-pandemic?
The 2026 median is 4.2 months on Class A office leases vs 1.8 months pre-2020 per Cushman & Wakefield. Post-2020 hybrid-work shift and Class B/C distress widened concession packages substantially.
Can I negotiate free rent on a renewal?
Less commonly. Renewal economics typically don't include substantial free rent because the tenant is staying. Renewal incentives usually take the form of TI refresh allowance or rent reduction rather than free rent.
Does free rent apply if I terminate early?
Generally no. Most leases include a "give back" of unamortized free rent if the tenant terminates early without landlord consent. The free rent value gets recalculated as additional rent owed. Read your lease's early-termination clause.
Related guides
- Commercial lease negotiation tips and AI coach
- Commercial lease rent escalation clause guide
- Commercial lease broker fee
- Tenant improvement allowance calculator
Sources
- Cushman & Wakefield Marketbeat (US) accessed 2026-05-02
- Cushman & Wakefield Free Rent Guide accessed 2026-05-02
- CBRE Lease Renewal Trends accessed 2026-05-02
Not financial or legal advice. Estimates based on publicly available market data and broker reports. Commercial real-estate is highly local and deal-specific. Consult a licensed commercial real-estate broker and a real-estate attorney before signing any lease.
This is a syndicated post. Original article + interactive calculator: https://commercialleasecost.com/articles/free-rent-period-commercial-lease/
