At a glance
- Rent-free periods are the most widely used incentive and the easiest to compare.
- Fit-out contributions work well for longer lease terms, less so for short leases.
- Always calculate the effective rent before committing to an incentive.
Why incentives exist
Tenants compare office space not only on base rent, but also on total costs and ease of moving in. Incentives make it easier to commit to signing without reducing the base rent — and therefore the property's assessed value.
The most widely used incentives
- Rent-free period: one to three months per contracted lease year.
- Fit-out contribution: a contribution towards the tenant's fit-out of the office space.
- Stepped rent increases: a lower rent in the first year that rises in stages.
- Reduced service charges during the initial period.
Calculating the effective rent
Add up the total rent over the full term, deduct the value of the incentives and divide by the number of months. A base rent of €150 per m² with two months rent-free over a five-year term results in an effective rent of approximately €145 per m² — a difference you should always factor in when comparing offers.
When incentives backfire
A property's valuation often takes account of the contractual base rent rather than the effective rent. Too many concessions therefore not only reduce immediate returns, but can also affect the resale value if future buyers calculate the actual rental income stream.
Alternative: a shorter term at a higher rent
Some tenants prefer a shorter term with fewer incentives to a long term with numerous concessions. This suits growing businesses that value flexibility more than a low initial rent.
Frequently asked questions
Should I include incentives in the lease?
Yes, all agreements on rent-free periods, fit-out contributions or stepped rents should be included in the special provisions of the lease.
Do incentives affect my property's valuation?
Indirectly, yes: valuations often consider the effective rent and the sustainability of the rental income stream, not just the contractual base rent.