December 1, 2020  
 
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Sample Lease Terms for a Commercial Building

Leasing office space? We walk you through common office lease terms. Don't let leasing terminology get in your way of getting the best possible lease.

The day you lease new space is a big day for your company.
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With the stroke of a pen, you are locking your business into a physical space and contractual limitations for a year or more. Since mistakes are out of the question, here's are some of the most important terms to look for in your new lease.

Standard leases are like unicorns and tooth fairies they don't exist, simply because lease terms are always negotiable. Blind acceptance of a boilerplate lease is usually an indication that the business owner has failed to negotiate the best terms for his business. However, there are certain topics that should and must be discussed in every lease, regardless of the where the details fall.

Lease Term & Price

The length and price of the lease obviously need to be contained in the lease document itself. Commercial leases are typically priced at annual, per square foot rate. If the lease isn't explicit, request that it be amended for the sake of clarity. Also, make sure the lease clearly describes the term, or the contractual length of your relationship with the landlord. Commercial lease terms often range from one to five years.

Lease Extensions

In some cases, you may be able to build the possibility of an extension into the lease. If so, the lease document should describe the timing of an extension request and whether the extension will involve renegotiation or a continuation of the current rate.

Lease Restrictions

Restrictions are deal-breakers for many tenants. Above all else, you need to ensure that your business will be able to perform activities that are vital to its success throughout the entire term of the lease. The landlord's restricted uses for the space need to be articulated in the lease and any potential issues should be resolved in a manner acceptable to both parties before it is finalized.

Utilities and Insurance

The lease document is responsible for defining who will pay for extraneous expenses like utilities, taxes, repairs, and insurance. Landlords frequently assume responsibility for the upkeep of common areas, taxes, and general building insurance. However, tenants may be responsible for utilities, repairs to the leased space, and carrying certain forms of insurance.

Subleasing

Subleasing can be a savior for tenants who need to relocate before the term of their lease expires. Some landlords are open to subleasing under certain conditions, while others prohibit subleasing altogether. Either way, you need to know what your options are before you finalize the deal, and the lease document is the place to look for a clear description of your subleasing options as well as any conditions that may apply.

Property Access

Does your lease give you access to the space at any time or is access limited to certain hours? In addition to key employees, who else will have access to your space? Access-related issues are frequently left out of lease documents even though they can potentially impact your business' ability to function more than anything else.

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Mistakes When Signing a Lease


Conversation Board

Have you leased office space? What's your advice on leasing office space? Please share.

Becky 3/16/2009

I am making a deal to lease a building for an Antique Shop. We have somewhat agreed on the cost per square foot but I was surprised that I am expected to pay a Cam. It says I am responsible for taxes, debris removal, trash etc. I thought this was unfair. What do you think?

Ken Gaebler 3/17/2009

Becky, that's not that unusual. If they had included all of those costs in your rent, they'd be asking for more rent per square foot. Next time, ask up front whether it's a gross lease (no CAM) or whether there are CAM costs. Good luck!


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