Last updated October 2026
Chicago-area office landlords typically concede three things to win or keep a tenant: free rent, an improvement allowance to build out or refresh the space, and better lease terms. In the transactions we track and negotiate, competitive tenants are achieving about 1 to 2 months of free rent per year of term, which works out to 5 to 8 months on a 5-year lease. How much of that a tenant actually gets depends less on the market than on timing and leverage. Since 2004, Tenant Advisors has negotiated more than 2,000 office leases for tenants of 3,000 to 50,000 SF, and the biggest packages consistently go to tenants who start early and have a real alternative.
Key Takeaways
- Expect about 1 to 2 months of free rent per year of term, or 5 to 8 months on a 5-year lease, in the transactions we track and negotiate.
- Longer terms earn bigger packages. A 3-year deal gets a fraction of what a 7-year deal gets.
- The improvement allowance and lease language are often worth as much as the rent itself.
- Renewing tenants can earn a full package, but only if they start 12 to 18 months before expiration.
- Landlords trade one concession for another, so compare offers on total occupancy cost, not the headline rate.
How Much Rent Abatement Is Realistic?
Abatement scales with the length of the commitment. A landlord recovers its concessions over the term, so it can afford to give more on a 7-year lease than on a 3-year one. The table below shows the ranges we see in the transactions we track and negotiate for common lease terms.
| Lease term | Typical abatement range | What else is usually on the table |
|---|---|---|
| 3 years | About 3 to 5 months | Modest allowance, often a paint-and-carpet refresh |
| 5 years | About 5 to 8 months | Meaningful allowance for reconfiguration or a new build-out |
| 7 years | About 7 to 14 months | Largest allowance, plus stronger expansion and renewal rights |
Rounded ranges from the transactions we track and negotiate as of October 2026. Results vary by building, deal size, and tenant credit.
To put a dollar figure on it: in O’Hare Class A space at $38 to $43 per SF gross, one month of abatement on 10,000 SF is worth roughly $32,000 to $36,000. Moving from the low end of the range to the high end on a 5-year deal can be worth about $100,000 to a tenant that size.
What Does the Improvement Allowance Pay For?
The tenant improvement allowance is money the landlord contributes toward construction in your suite. It typically covers walls, doors, ceilings, lighting, flooring, and the mechanical and electrical work that goes with a new layout. Depending on the lease, some of it can also go toward architectural and engineering fees, cabling, signage, or moving costs.
Three points matter as much as the dollar amount:
- Who manages construction. A landlord-managed build-out can carry supervision fees and less control over cost. A tenant-managed build-out puts you in charge of the budget.
- Whether unused allowance converts to rent credit. If the work comes in under budget, you want the difference back, not left on the table.
- When the allowance expires. Some leases require you to use it within a set window. Negotiate enough time to finish the work.
Which Lease Terms Are Worth as Much as the Rent?
Tenants often focus on the rate and abatement and leave the rest of the lease to the landlord’s standard form. That is where a lot of value slips away. The terms worth negotiating include:
- Annual escalations. The yearly increase compounds over the term. Small changes here add up.
- Operating expense and CAM controls. A cap on controllable expenses, clear exclusions, and audit rights limit what you pay beyond base rent.
- Assignment and sublease rights. Reasonable consent language gives you a way out if your business changes.
- Expansion, contraction, and renewal options. These rights cost a landlord little at signing and a great deal to win back later.
If you already have a lease and suspect you are overpaying on expenses, an office lease audit can surface billing errors and terms worth fixing at your next renewal.
Does a Renewal Earn the Same Package as a New Lease?
It can, but most renewing tenants leave money behind because they start too late. A landlord prices a renewal against what it would cost to replace you: months of vacancy, leasing commissions, and a new build-out for the next tenant. If you start 12 to 18 months before expiration and are visibly touring other buildings, the landlord has to compete for you. If you start with six months left, it knows you can’t realistically move. Our lease renewal negotiation process is built around keeping relocation a credible option, and a side-by-side renewal vs. relocation analysis shows what each path actually costs.
When Will a Landlord Push Back?
Concessions shrink when a building is well leased, when the term is short, when the tenant’s credit is thin, or when the requested build-out is highly specialized. Landlords also resist giving everything at once. A request for maximum abatement and a maximum allowance on a short term usually gets one or the other. The practical move is to decide in advance which concession matters most to your business and negotiate the rest of the package around it.
If your lease expires in the next 18 months, contact us for a lease review and market benchmark. Because the landlord pays our fee, there is no cost to tenants.
Frequently Asked Questions
How much free rent can an office tenant get in Chicago?
In the transactions we track and negotiate, competitive tenants achieve about 1 to 2 months of free rent per year of lease term. On a 5-year lease, that is roughly 5 to 8 months. Where a deal lands in that range depends on lease length, credit, building vacancy, and whether the tenant has a credible alternative.
Do landlords give concessions on lease renewals?
Yes. Landlords would rather keep a tenant than pay for downtime, commissions, and build-out to replace one. Renewals can earn rent abatement and an improvement allowance, but usually only when the tenant starts 12 to 18 months before expiration and is visibly comparing other buildings.
Is it better to take free rent or a larger improvement allowance?
It depends on your cash position and how much work the space needs. Free rent saves cash during the term, while an allowance pays for construction you would otherwise fund. Landlords often let tenants trade one for the other, so compare both on total occupancy cost before choosing.
What does a tenant rep cost to negotiate concessions?
There is no cost to tenants. The landlord pays the tenant rep’s fee as part of the transaction, the same way it pays the listing broker.
About the authors: Tom Koelzer and Dave Ven Horst co-founded Tenant Advisors in 2004 and have represented only office tenants ever since, never landlords. The firm has negotiated more than 2,000 office leases across the Northwest Suburbs, O’Hare, the East-West Corridor, the North Suburbs, and the Chicago CBD. Questions about your lease? Contact us or call (847) 778-0296.