Month End Glossary

Lease Incentive

A lease incentive refers to a benefit or offer provided to a tenant by a landlord to encourage them to enter into a lease agreement.

Lease incentives are beneficial terms or offers extended by landlords to attract potential tenants. These may include rent-free periods, contributions towards fit-out costs, or reductions in rental rates. For example, a landlord might offer the first two months of rent free as an incentive. Lease incentives are outlined in the leasing contract and often tailored to meet the mutual needs of both the landlord and tenant.

Consider a scenario where a commercial property is sitting vacant. The landlord may offer lease incentives, such as extra parking spaces, favorable leasing terms, or financial support for interior alterations, to make the property more appealing to prospective businesses. For tenants, lease incentives can offer a substantial financial advantage, reducing the initial costs of occupying a property or making the overall leasing agreement more competitive compared to other offers in the market.

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