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Opening a retail store takes time – in most cases. Occasionally, a retailer will leave and the following retailer to back fill the space will be of the same use type. This happens often with restaurants, but for the most part “the shoe does not fit perfectly”.  As a result, most retailers ask for a FREE RENT period.

Free Rent is a specified time period negotiated between the Landlord and Tenant allowing the Tenant to handle all construction, legal, permitting and operational issues before opening for business.

The amount of free rent achieved through negotiations depends on many factors, but here are the main factors:

  • Market Conditions
  • Duration of Vacancy
  • Type Of Use

Market Conditions influence free rent because in a hot market landlords are less motivated to give extended free rent periods. In a slow market, negotiating a longer free rent period is much more likely.

The Duration of a Vacancy can also determine the amount of free rent provided by a landlord. Challenging centers and spaces are options for obtaining more free rent. Additionally, if a space sits vacant for a long time there is a better possibility of getting free rent.

The Type of Use also determines the amount of free rent. Restaurants require considerably more time, money and inspections to get open when compared with insurance agencies. Restaurants usually have the ability to negotiate a considerably longer free rent period, even in a hot market. This is especially true for white table cloth restaurants.

Free Rent can sometimes be the factor that makes or breaks a deal. It is certainly one of the key negotiating points. There is always remove for negotiation with a free rent period, but it is important to know how it fits into your deal.

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