Free Rent is a Win Win
In this soft leasing market, free rent is a win for both landlord and tenant.
A dollar today is worth more than a dollar tomorrow. Likewise a dollar saved by a tenant is worth more than a dollar saved later. So as a tenant, I’d rather have free rent upfront than a lower rent later.
Free rent for the landlord means a higher rent later, everything else being equal. A higher rent later means a higher net operating income. A higher net operating income will result in a higher sale price on exit, all else being equal.
So both landlords and tenant should recognize the merit of using free rent.
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