CRE glossary
Lease commencement date
The lease commencement date is the day the formal lease term begins and rent obligations start. It is distinct from the execution date (when the lease is signed) and from rent commencement (when the tenant actually begins paying base rent, after any free-rent period). Misalignment between these dates is the single biggest source of lease administration confusion.
A typical lease has three dates: (1) Lease execution date, the day both parties sign. (2) Lease commencement date, the day the term legally starts. (3) Rent commencement date, the day the tenant starts paying base rent (after free-rent abatement). For a deal with 6 months free rent, these could be: execute March 1, commence April 1 (start of fixturing), rent commence October 1 (after 6 months free).
Construction delays push the commencement date. Most leases include a 'delivery condition', the landlord must deliver the space in a defined state (e.g., demolished, vanilla shell, or turnkey). The commencement clock doesn't start until delivery. If the landlord misses the delivery date by 30+ days, tenant typically gets day-for-day rent abatement; by 90+ days, often termination rights.
The commencement date drives many other deadlines: free rent expiration, escalation triggers, renewal-option windows, expansion rights. A wrong commencement date, even by 30 days, cascades into 5–10 other miscalculated dates. Locking it down precisely is critical at lease execution.
Example
- Execution date
- March 1, 2026
- Landlord delivers space
- March 15, 2026
- Commencement date
- April 1, 2026
- Free rent period
- 6 months (April – September)
- Rent commencement date
- October 1, 2026
- Lease expiration (84 mo from commencement)
- March 31, 2033
Broker perspective
Distinguish all three dates clearly in the LOI: lease execution, commencement (lease term + obligations), rent commencement (after free rent). Build in 30 days of buffer between landlord delivery and commencement so construction delays don't trigger commencement before the tenant is ready. Long-stop dates protect against landlord delivery delays.
Frequently asked
People also ask
Commencement date vs execution date?
Execution: when the lease is signed. Commencement: when the term begins. Often 30–60 days apart for fixturing.
What if the landlord doesn't deliver on time?
Tenant gets day-for-day rent abatement (push back the rent commencement date). Long delays trigger termination rights, typically at 90–120 days.
Can the tenant move in before commencement?
Yes, during the fixturing period. Tenant is in possession but not paying base rent (paying for utilities and any other use-related costs).
Does the term run from execution or commencement?
Always from commencement. Execution to commencement is the runway period; the term itself is from commencement to expiration.
Related terms
Letter of intent (LOI)
A non-binding outline of the major business terms, rent, term, TI, options, that becomes the basis for the binding lease.
Free rent (abated rent)
A period at the start of the term where the tenant pays no base rent, used to offset move-in costs and competitive pricing.
Build-out (fit-out)
The construction work to customize a leased space for the tenant, paid via TI allowance, tenant cash, or both.
Tenant improvements (TI / TIA)
Money the landlord contributes toward customizing the space for the tenant, usually expressed as $/SF.
See lease commencement date extracted from a real lease.
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