graduated rental lease

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A commercial lease that offers low rental rates in the early months or years,increasing over time to reach market rates. Sometimes the later rents are greater than market rates, as when the low early rent must be recouped in later years; usually offered as an incentive to secure tenants for a new building or one suffering the recent departure of an exceptionally large tenant. Other times it is offered when a large tenant vacates but continues paying rent for the unexpired term of the lease—the old tenant will make an arrangement with the landlord and effectively subsidize the new tenant's rent for some period of time.

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