What does the term "free rent" most commonly represent in commercial leases?

The term "free rent" most commonly refers to rent that is waived for a specific time period within a commercial lease. This provision is often used to attract tenants by offering a rent abatement period, during which the tenant is not required to make rent payments. This incentive can help businesses establish themselves without the immediate financial burden of rent, ultimately benefiting both the landlord and the tenant by facilitating occupancy.

This approach is particularly common in competitive real estate markets where landlords want to fill vacant spaces quickly or support tenants in fitting out their leased space. It acknowledges the initial costs that a tenant might incur, such as renovations or moving expenses, allowing them to stabilize their operations before beginning regular rental payments.

Alternatives like free services or utilities, while potentially valuable, do not represent the standard definition of "free rent" in lease agreements. Similarly, guaranteed rent increases and similar adjustments pertain to different contractual elements that do not involve the actual waiver of rental payments for a designated period.