Cost of vacancy = RSF × monthly rent × months vacant. A 4,000 RSF suite at $3.00/RSF/month loses $12,000 in base rent for every month it's empty, or $108,000 over nine months.
The concession math compares that against free rent. If offering two months of free rent gets the suite leased four months sooner, you gain four months of rent and give up two, for a net result of +$24,000.
The real cost of vacancy is higher than this shows, because you're also carrying operating expenses, taxes and insurance on the empty suite.
Is free rent better than lowering the rate?
Often, because free rent is a one-time cost while a lower rate affects every month of the term and can affect the property's value. The right mix depends on the market, the tenant and your plans for the building.
What about TI and leasing commissions?
They're part of the full picture. This calculator focuses on base rent and free rent to keep the comparison clear; we can help you model the full cost of a deal.
How do I estimate months vacant?
Look at how long comparable suites in your submarket have taken to lease, and at how your suite compares on size, condition and price. We can help you pressure-test that number.