Rent Abatement Means Free Rent: How It Works in an NYC Office Lease

Rent abatement in a commercial lease is, in most cases, free rent: a run of months, usually at the start of the term, in which the tenant pays no base rent. On New York office deals a common shape is about one free month for each year of term, and more when the space needs work. The free months are rarely free of everything, because electricity and escalations usually keep running. Abatement also has a second meaning. It is the remedy that suspends rent when a fire, a flood or a failure of building services leaves the space unusable.

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Updated 2026-10-03 · Nomad Group

Abatement and free rent: one concession, two names

Brokers say free rent and the lease says abatement. In a negotiated deal they are the same thing, written into a clause of its own. Landlords would sooner give months than cut the rent, because the stated rent is what values the building, and a free month lowers what you pay without changing that figure.

The clause matters more than the count. It says which charges are abated, when the months begin and what a default does to them. Free rent works through an example.

How many free months a New York office deal usually carries

About one month per year of term is the common shape, so a five-year lease often carries around five. The count rises when the space needs construction, when a floor has sat empty, or when the landlord would sooner hold its stated rent and give elsewhere.

It also trades. A landlord short of capital may offer more months in place of improvement money, and the reverse. Compare offers on net effective rent, which folds the free months, the allowance and the escalations into one figure. How to negotiate an office lease ranks what moves.

What is still billed during the free months

Most abatement clauses forgive base rent only. Additional rent keeps accruing: electricity, at roughly $2 to $4 a square foot a year, and escalations where they have started. A free month is therefore seldom a month with no bill.

Asking for the abatement to reach electricity as well is a reasonable request on many deals. Check too when the escalation clock starts. If it runs from lease commencement while rent starts later, the first increase arrives sooner than a budget built on the rent schedule would expect.

Free rent on a prebuilt floor, where nothing has to be built

On raw space, free months usually cover a construction period, and months you could not have occupied anyway are a weaker concession than they look. A prebuilt floor is different. The landlord has finished the work, the team is usually in within two to four weeks of signing, and any free month is a month of real occupancy with no base rent.

The usual reason for a long abatement, time to build, is absent, so do not expect the count a raw floor would get. Ask for the months you are offered to sit at the front of the term. The live block below shows the furnished and prebuilt floors now on our book, and the prebuilt entry explains how their leases are written.

The other abatement: casualty and lost services

The same word names a remedy. Under the casualty clause, rent abates for the part of the premises that a fire or flood makes unusable, until the landlord restores it. A negotiated services clause can do the same when the landlord fails to provide access, elevators, HVAC or electricity for more than a set number of business days.

These clauses differ from lease to lease on what abates, how long the landlord has, and when either side may end the lease. Have your attorney confirm the wording.

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The full guide

This page is the short answer. The long one, with the numbers worked through, is here:

Are free rent and rent abatement two different things?

Usually not. In a negotiated lease, abatement is the document's word for months with no base rent. It is also the name of the remedy that suspends rent after a casualty or a long loss of services, so check which one a clause is describing.

Can a landlord take the free rent back after a default?

Under many leases, yes. A clawback makes abated rent repayable if the tenant defaults, sometimes all of it. The fairer version shrinks the repayable amount as the term passes, or applies only after notice and a chance to cure. Negotiate it before signing, and have your attorney confirm the wording.

Why would a landlord give free months instead of a lower rent?

Because building values and lender terms are tied to the stated rent. A landlord would sooner give months at zero than reduce that number. For a tenant the form matters less than the total, so compare proposals on net effective rent.

Does a free rent period delay the escalations too?

Not automatically. Some leases start the escalation clock at lease commencement, so the first increase arrives while the rent is still abated or soon after. Ask for escalations to run from rent commencement, and have your attorney check the dates in the draft.

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