10 RENT CONCESSIONS
EVERY TENANT SHOULD KNOW BEFORE SIGNING A LEASE
April 16, 2025
Shane Minnis
If you’re in the market to lease office, R&D, or industrial space… whether you want to expand or relocate, consolidate operations or simply stay in your current space and renew your lease…
There’s more to negotiate than just the rent.
Knowing what to ask for can save you tens (or even hundreds) of thousands of dollars over the life of your lease. Not knowing, can equally cost you… and cause future breakdowns and headaches.
Assuming you want to get a great deal + maximize ROI on your next lease…
I’m sharing with you – The 10 Rent Concessions Every Tenant Should Know Before Signing a Lease:
1) Free Rent/Discounted Rent
Is a period of time when you can utilize the space rent-free or at a discounted rate. It’s usually structured at the beginning of the lease or during slower business periods.
Why It Matters: This is a direct financial benefit that helps with cash flow during move-in, build-out, or slower ramp-up periods.
Pro Tip: Make sure you’re clear on all rent and expenses you’re responsible for because what you think is “free” rent may actually only be discounted rent and it’s never fun receiving a bill that wasn’t expected…
2) Lease Term
Is the period of time you commit to a lease. Here’s a quick overview:
Why It Matters: This is a lever that directly impacts negotiating leverage. Longer terms can increase your negotiating power for concessions but may decrease flexibility.
On the other hand, a shorter lease reduces negotiating power but may offer greater flexibility to adapt to growth or uncertainty.
Pro Tip: Get creative – pair lease term with options for the right balance of security and flexibility. Negotiate multiple scenarios to explore your options and get the right mix of terms and concessions.
Also, it’s helpful to request early access to install furniture, fixtures, equipment and further fit out the space to hit the ground running when you start paying rent.
3) Tenant Improvement Allowance
This is an allowance provided by the landlord to build out or customize the space to fit your needs.
Why It Matters: Finding the perfect space that is move-in ready is like finding a needle in a haystack – it’s possible but assume custom improvements will be needed.
Depending on the improvements needed – this is usually one of the more expensive aspects of a lease. A generous TI allowance can offset expensive build-out costs to customize a space to your needs – sometimes covering 100% of construction.
Pro Tip: While the dollar amount of the TI allowance is important – the devil is in the details…
Know the fine print in the lease, such as distribution requirements and what the allowance can be used for. Also, make sure things are clearly defined – delivery condition, finish standards, and who is responsible for what.
4) Other Allowances
There’s a lot of logistics involved with moving, and it all adds up. Some landlords may offer allowances to help offset moving costs beyond the build-out as incentive to lease space – for example:
- Moving Allowances
- Furniture Allowances
- Space Plan/Architectural Design Allowances
Why It Matters: These one-time costs can add up quickly. Negotiating allowances here reduces out-of-pocket expenses and simplifies your transition.
Pro Tip: Get clear on your moving costs and logistics early to factor them into lease negotiations. Create a competitive environment for increased leverage.
5) Renewal Option
Is a pre-negotiated option to extend your lease term without the commitment to do so.
Why It Matters: It’s a flexible way to help secure stability and continuity for your business. Without this, there is no guarantee you can renew or extend your lease.
Pro Tip: Even if you don’t think you need it, ask for one. Your future self will thank you.
6) Expansion Option
Is a pre-negotiated option to expand your space without the commitment to do so.
Why It Matters: It’s a flexible way to help secure expansion for your growing business.
Pro Tip: Plan for the future and negotiate expansion options now, when you have the greatest leverage.
7) Termination Option
Is a pre-negotiated option to terminate your lease early without the commitment to do so.
Why It Matters: It’s a flexible way to help secure a lease for an extended term, but with an exit route if needed.
Pro Tip: This concession is usually difficult to get and more costly than it’s worth – I’d recommend putting more energy towards other concessions.
8) Purchase Option
Is a pre-negotiated option to purchase the property without the commitment to do so.
Why It Matters: It’s a flexible way to lock in terms with clear expectations to secure future stability and continuity before market conditions shift.
Pro Tip: Clearly define terms up front, while both parties are motivated – as time passes motivations tend to shift.
9) Parking Concessions
Parking concessions can take shape in various forms, such as:
- Free or discounted parking rates
- Reserved or preferential parking (types or locations)
- Infrastructure (EV charging stations)
- Services (valet, shuttle, car washing, etc)
- Parking allocations (# of stalls, flexibility for more or less parking)
- Alternative uses/needs (storage, over-night parking, etc)
Why It Matters: Driving remains the primary mode of transportation in Silicon Valley. Accommodating the evolving parking needs of current and future drivers can easily become an added perk or headache that influences employee and customer experience. It can also be a critical requirement to receive permitting for particular uses.
Pro Tip: Get clear on your parking needs early to factor them into lease negotiations.
10) Security Deposit
A security deposit is typically required upfront as a financial safeguard for the landlord to offset real and perceived risks. Depending on your financials and the lease terms you may be able to negotiate a reduced deposit.
Otherwise, it may be worthwhile to explore:
- Letter of credit or personal guarantee in lieu of a cash deposit
- Phased deposit paid over time
- A refund or deposit reduction after a set period of on-time rent payments
Why It Matters: Tying up cash in a security deposit is not the highest ROI on your resources and can hurt your cash flow.
Pro Tip: Smash the perception of risk and neutralize any inkling of doubt or concern up front!
Set yourself apart from the competition – Provide landlords with a clear and compelling financial picture so they pursue your tenancy… not the other way around.
Check Out Our Financial Packaging Blueprints:
Why It Matters
Rent concessions aren’t just giveaways – they’re a reflection of market conditions, tenant leverage, and smart negotiation.
Knowing what to ask for – and when – can turn a good lease into a great one with the flexibility to set your business up for success.
If, within the next 18 months, you’re considering:
- Expanding or relocating your workplace
- Consolidating operations
- Renewing or extending your current lease
Then you have a real estate challenge on your hands, and you’re likely faced with a decision about what to do next…
While I can’t guarantee rent concessions – I can guarantee the sooner you start, the more options and negotiating power you’ll have – but the clock is ticking…
Dedicated To Helping You Get A Great Deal + Maximize ROI On Your Next Lease,
– Shane Minnis
P.S. Contact Us Today – to schedule a free, no-obligation consultation. Whether you’re ready to get started or have questions, we’re here to help.
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