Price is often focused on as the way you determine if you are getting a "good deal" but the overall occupancy cost is the more important. The "effective rental rate" is the number that you should use when comparing lease proposals. Your effective rate is the figure you get after factoring in free rent and other cash concessions. Example: 1 month free and then 23 paid months at $18 per SF = $18 X (23/24) = $17.25 Effective Rate.

Real estate agent

A person licensed to act as an agent for another person or business to negotiate a lease or purchase of a leasehold or property, respectively, for a fee.

Renewal option

Lease language that provides the means for tenant to give landlord notice of its intent to renew (extend) the lease.


This is the agreed monthly amount written within the tenancy agreement which remains the same for the term of the lease and which usually excludes the standard management fee for the building and government rates.

Rent commencement date

The date upon which the rent and usually the term of the lease begins. May be different from the lease commencement date when certain obligations must be fulfilled such as the construction of tenant improvements.

Rent Free

Rent Free is a very important part of the occupancy cost that can lower the effective lease rate for the tenant but still leave a "higher" lease rate for the landlord when they go to sell the building. Free rent also allows tenants to use the cash they would normally spend on rent to pay for movers, wiring and furniture. Free rent is typically given on the front end of the lease and is in addition to the agreed lease term. Example: 3 year lease with 2 free months = 38 months of occupancy.

Replacement cost

The current cost of replacing the subject property with property having exactly the same utility and amenities.

Rules and Regulations

Building standards that are binding on the tenants are usually set forth in a part of the lease covering such things as use of common areas, door lettering, signs, noise, odors, moving or installation of equipment, special locks, etc.

Replacement Tenant

Early Termination may be achieved through introduction of a replacement tenant to take over the lease. This can be done in one of two ways:

1. The new or replacement tenant takes over the property until the expiry of the existing lease.
2. The new or replacement tenant has a lease granted by the landlord. In either case, the outgoing tenant will need the permission and co-operation of the landlord and should expect to pay the landlord's share of the agency fee, legal costs and stamp duty payable.