Rent Abatement

Rent abatement — often called free rent — is a period during which the tenant pays no rent or reduced rent. It is one of the most common concessions in commercial leasing, and for healthcare tenants it serves a specific purpose: covering the weeks or months when the space is under construction and generating no revenue. A practice signing a lease with a heavy buildout should negotiate abatement to span the construction period, so it is not paying rent on space it cannot yet use. Abatement can also appear as a straight negotiating concession, or as relief tied to specific events. The key details are how long it lasts, whether it applies to base rent only or also to CAM and other charges, and exactly when it begins. Abatement feeds directly into effective rent — it is one of the concessions that makes a higher headline rate genuinely cheaper.

Rent abatement offsets the dead time and cost of buildout, and lowers effective rent. Negotiating it to cover the full construction period keeps a practice from paying for space it cannot yet occupy.

A dental practice negotiates four months of rent abatement to cover its operatory buildout. Rent commences only after the space is complete, so the practice avoids paying roughly $40,000 in rent on an unusable, under-construction suite.