Rent Abatement Clauses for Commercial Tenants

 Posted on January 22, 2025 in Commercial Lease Agreements

Commercial leases offer significant room for negotiation between landlords and tenants. One provision that reflects this room to negotiate is the commercial rent abatement clause, an incentive sometimes negotiated by commercial tenants or offered by commercial landlords. Commercial rent abatement clauses temporarily reduce or eliminate rent payments under certain circumstances. An experienced commercial lease attorney in Naperville, IL can negotiate a commercial rent abatement. 

What Is a Commercial Rent Abatement?

Commercial rent abatements reduce or eliminate the tenant’s obligation to pay rent for a period of time. 

What Are Common Types of Commercial Rent Abatements?

Rent Abatement During Tenant Improvements

Unlike residential spaces whose main features stay the same between tenants, commercial spaces often require significant improvements to meet the needs of the incoming business. Commercial landlords may grant abatements during initial tenant improvements if the tenant needs to make significant improvements, such as changing a restaurant space into a retail store. 

Rent Abatement Concession 

Commercial tenants can sometimes obtain rent abatements as part of the negotiating strategy, a concession similar to a lower rate or an expansion option. Often, landlords will get tenants to sign a longer lease in exchange for a rent abatement concession. 

Rent Abatement When the Property is Uninhabitable

Most commercial leases include a rent abatement clause granting a tenant an abatement in the event the property is uninhabitable due to a force majeure event such as an act of God, natural disaster, or war. An abatement of this kind would keep the tenant from paying rent while the property cannot be used, while still keeping the tenant in the space in the longer term.

Why Would a Landlord Agree to a Commercial Rent Abatement?

Landlords have several incentives to negotiate rent abatements:

• Attracting new tenants: In a competitive commercial real estate market, rent abatements can draw new tenants instead of keeping the commercial space empty. 

• Ensuring the tenant succeeds: Commercial landlords generally prefer long-term leases. By giving a tenant a financial break, landlords can help tenants who may be struggling and ensure that the tenant keeps the lease in the long run. 

• When the property is damaged: If the rental property has been damaged due to natural disasters, the landlord may grant the tenant a rent abatement. 

Contact an Oak Brook, IL Commercial Real Estate Attorney

Negotiating a commercial lease is a complex process necessitating an experienced Naperville, IL commercial lease attorney. At Lindell & Tessitore, P.C. we represent commercial clients in negotiation to get the most favorable lease terms for all types of commercial leases. Contact the law firm at 630-778-3818 for a consultation.