Greater Boston Occupiers see a trade-off in rent concessions as construction costs rise, and landlords become more cash constrained
Free Rent vs. Tenant Improvement Allowances
- Free rent continues to be the preferred concession among Trophy and Class A landlords. The trade-off between decreasing tenant improvement allowances (TIAs) and increasing free rent offerings indicates that landlords are prioritizing rent relief over upfront capital contributions. This shift is likely driven by cash flow constraints and the rising cost of building materials.
- The spread between net effective rents and full-service base rents has narrowed slightly to $8.36, yet it remains nearly four times higher than pre-pandemic levels, suggesting that occupiers can still derive significant value from landlords.
- With an increase in active tenant requirements over the past six months, the gap between free rent and tenant improvement allowances has narrowed slightly and is not expected to widen in the near term.
July 28, 2025
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