Record the offer before calculating
Keep the original quote beside every calculation. Record the rentable area, annual or monthly period, lease length, scheduled increases, incentive conditions and commencement date. An incentive described verbally remains an open question until its amount and conditions are documented.
Statistics Canada’s reporting guide includes inducements in its net effective rent concept and excludes operating costs and additional rent. Your own comparison should identify its calculation method explicitly; a simplified tenant worksheet is not the official statistical index.
Separate concessions from construction money
Rent-free time reduces specified payments. An improvement allowance funds eligible work under the offer’s conditions. These are different benefits: an allowance may require the tenant to pay contractors first and receive reimbursement later. Track the reimbursement date separately from the headline amount.
Keep a cash-flow version with money assigned to the month it is paid. A second, undiscounted summary can spread concessions across the full term. Label it a simplified comparison, particularly where allowances cover improvements with value beyond the lease.
Hypothetical example: a free-rent period
Assume a hypothetical 2,000-square-foot space at $24 per square foot annually, held flat for five years, with three months of base rent waived. Contracted base rent before the waiver is $240,000. The waiver is $12,000, leaving $228,000 over 60 months.
Dividing $228,000 by five years and 2,000 square feet produces a simplified effective base rent of $22.80 per square foot annually. This example excludes additional rent, utilities, tax, improvements and financing. It assumes the free months are inside the five-year term and waive base rent only.
Compare the opening cash requirement
List the deposit, fit-out spending, moving costs, equipment and overlap with the current premises. Keep refundable deposits separate from expenses: they affect available cash even when they are not an economic cost. Identify who bears overruns and which costs have written quotations.
A lower average rent can accompany a much larger opening cash requirement. Compare both figures before choosing a space. If incentives differ in timing or certainty, show that difference directly rather than collapsing everything into one precise-looking rate.
Turn unknowns into questions
Ask whether free rent covers base rent alone, whether incentives survive an early exit, how improvements are approved and when reimbursement occurs. Keep these as document-review questions rather than assumed answers.
Use the lease comparison tool for like-for-like recurring costs, then add a separate incentive schedule. Save the source date and assumptions with the result so a revised proposal can be compared without losing the earlier offer.
Sources and scope.
- Statistics Canada — Survey of Commercial Rents reporting guide ↗
- Statistics Canada — Methodology of the Commercial Rents Services Price Index (archived technical reference) ↗
Sources checked 12 October 2026. Numerical examples are hypothetical; figures from the official index carry their published source period.
Questions worth asking.
Does free rent mean the space costs nothing for those months?
Only the payments expressly waived in the offer are reduced. Model all other recurring and opening costs separately.
Is effective rent the same as all-in occupancy cost?
No. This guide’s effective base-rent example excludes the operating and business costs needed for an occupancy budget.