In an office lease negotiation, the tenant demands the landlord to offer him either (1) a free-rent concession equal to twomonths worth of rent ( $12,000), or (2) spend $12,000 on tenant improvement (TI) for the space under negotiation. The landlord immediately agrees to option (2). What do you think might be the main reasoning for the landlord to prefer (2)? Free-rent concession makes the landlord appears in a weaker bargaining position, leading to other tenants to demand the same Free-rent is money lost to tenant, but TI is spent on improving the landlord's own building. II improves the quality of the space so that the tenant may stay longer. Ti is tax+deductible while free-rent offers no tax benefit for the landlord