Commercial Leasing FAQs

Commercial leases are typically longer than residential leases, commonly ranging from 3 to 10 years. The length depends on factors like the type of space, the amount of build-out required, and the landlord's and tenant's preferences.

Longer lease terms often come with benefits like lower rent, higher tenant improvement allowances, and more negotiating power. However, they also require a longer commitment, so it's important to consider your business's growth plans.

The main difference is who pays for operating expenses:

• Gross lease: The tenant pays a fixed rent amount, and the landlord pays for most or all operating expenses (taxes, insurance, maintenance).
• Net lease: The tenant pays base rent plus some or all operating expenses. In a triple net (NNN) lease, the tenant pays rent plus taxes, insurance, and maintenance.

Net leases often have lower base rent but higher total costs. It's important to understand your total occupancy cost when comparing properties. Learn more in our Commercial Leasing Guide.

CAM stands for Common Area Maintenance. These are fees you pay to cover the cost of maintaining shared spaces like parking lots, lobbies, landscaping, and elevators.

CAM fees are typically calculated based on your proportionate share of the building's total leasable space. For example, if you lease 10% of the building, you pay 10% of the CAM expenses.

For a detailed explanation, see our guide: What Is Common Area Maintenance?

A Tenant Improvement Allowance (TIA) is money the landlord provides to help you customize the space for your business. It's typically expressed as a dollar amount per square foot.

For example, a $25/SF TIA on a 2,000 SF space would give you $50,000 toward build-out costs. The allowance is negotiable and often depends on the lease term and market conditions.

Learn more: Understanding Tenant Improvements

While you're not required to use an agent, working with a commercial real estate professional offers significant advantages:

• Access to a wider selection of properties, including off-market listings
• Expert knowledge of market rates and lease terms
• Skilled negotiation on your behalf
• Help navigating complex lease language
• Time savings in the property search process

In most cases, the landlord pays the commission, so there's no direct cost to you for using a tenant representative.

Absolutely! Almost everything in a commercial lease is negotiable, including:

• Base rent and rent escalations
• Tenant improvement allowance
• Free rent periods
• Lease term and renewal options
• CAM caps and exclusions
• Early termination clauses
• Signage rights

A skilled commercial real estate agent can help you negotiate favorable terms and identify opportunities you might not have considered.

As your lease term ends, you typically have several options:

• Renew: If your lease includes renewal options, you can exercise them to stay in the space.
• Renegotiate: Even without formal renewal options, you can negotiate a new lease with the landlord.
• Relocate: Move to a different space that better suits your current needs.

It's important to review your lease requirements for notice periods—many require 6-12 months notice before the lease expires. Start thinking about your plans early!

A Letter of Intent (LOI) is a preliminary document that outlines the basic terms of a proposed lease before a formal lease agreement is drafted. It typically includes:

• The space being leased and its size
• Proposed rent and lease term
• Tenant improvement allowance
• Target move-in date
• Any special conditions or contingencies

While usually non-binding, an LOI demonstrates serious interest from both parties and provides a framework for negotiating the final lease.

Space requirements vary widely depending on your industry and needs. Some general guidelines:

• Office space: 150-300 SF per employee is typical, though this varies with workspace style
• Retail: Consider your inventory needs, customer flow, and display requirements
• Warehouse: Factor in storage, equipment, shipping/receiving, and office needs

A commercial real estate agent can help you analyze your operations and determine the right amount of space. It's often better to lease slightly more than you currently need to allow for growth.

When evaluating potential spaces, consider:

• Location: Accessibility for customers, employees, and deliveries
• Condition: Age and condition of building systems (HVAC, electrical, plumbing)
• Layout: Does the floor plan work for your operations, or will significant modifications be needed?
• Parking: Adequate spaces for employees and customers
• Visibility/signage: Important for retail and customer-facing businesses
• Zoning: Confirm the space is zoned for your intended use
• Neighbors: Are surrounding businesses compatible with yours?