Stabilization free rent refers to a concession often offered by landlords in commercial real estate, particularly in the lease-up phase of a new or repositioned property. It involves offering tenants a rent-free period (or reduced rent) until the property reaches a stabilized occupancy level, usually around 90-95%.
The goal of stabilization free rent is to attract initial tenants more easily, helping the property achieve a desired level of occupancy faster. Once stabilized, normal lease terms (including full rent payments) take effect.
This is especially common in markets with high competition or for newly developed buildings that need to build tenant occupancy to reach a level of financial stability.