CRE glossary
Rent commencement date
The rent commencement date is the day base rent payments actually start, after any free-rent period. It's distinct from the lease commencement date (when the term begins) and is calculated as: lease commencement date + free-rent months. Some leases also distinguish 'base rent commencement' from 'OpEx commencement' for net leases.
Rent commencement is what brokers usually mean when they say 'when do I start paying.' The structure: commence the term April 1, 6 months free rent, rent commencement October 1. During the free-rent period, the tenant pays no base rent but typically pays operating expenses (CAM, taxes, insurance), this is gross free rent vs net free rent depending on lease language.
Rent commencement triggers other dates. The first escalation typically happens on the first anniversary of rent commencement (so year-2 rent kicks in on October 1, 2027 in the example above). The renewal-option exercise window is calculated from rent commencement, typically 9–12 months before expiration of the rent-commencement-anchored term.
Sophisticated leases distinguish 'base rent commencement' from 'additional rent commencement', base rent abated during free-rent period, but operating expenses continue. This matters because the abatement protection is partial. Tenants should negotiate gross free rent (everything abated, including OpEx) for the free-rent period, especially in modified-gross structures.
Example
- Lease execution
- March 1, 2026
- Lease commencement
- April 1, 2026
- Free rent
- 6 months gross
- Rent commencement
- October 1, 2026
- First escalation
- October 1, 2027 (anniversary of rent commencement)
Broker perspective
Always calendar rent commencement aggressively. Set a reminder 30 days before, tenants who lose track of free-rent expiration get a 'where's my rent check' email and panic. Modern accounting systems handle this; older firms still miss it. Confirm in writing what date OpEx commences vs base rent.
Frequently asked
People also ask
Is rent commencement the same as commencement?
No. Lease commencement = term starts. Rent commencement = base rent payments start. Free rent period sits between them.
Do I pay OpEx during free rent?
Depends on the structure. Gross free rent: no, everything abated. Net free rent: yes, base rent abated but OpEx continues. Confirm at LOI.
When does the first escalation happen?
Typically on the first anniversary of rent commencement, not lease commencement. Confirm in the lease.
Can rent commencement be delayed?
Only by negotiated landlord delays (delivery missed) or specific lease clauses. Default is hard date based on commencement + free-rent months.
Related terms
Lease commencement date
The day the lease term begins and rent obligations start, not the day the lease is signed.
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.
Base rent
The headline rent before pass-through expenses, usually quoted in $/SF/year and the starting point for every comp.
Escalation (annual rent increase)
The mechanism for increasing base rent over the term, fixed percentage, CPI-indexed, or stepped.
See rent commencement date extracted from a real lease.
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