Questions to Ask When Leasing a Commercial Space
These are the commercial lease questions to ask a landlord or leasing broker before you sign, written for a small business owner renting office space, leasing retail space or taking on a workshop unit for the first time. The 64 questions run in the order a deal does: rent and charges, the space and what you may do in it, build-out, repairs and services, term and exit, and last the points to raise when negotiating a commercial lease. The vocabulary is American (CAM, triple net, tenant improvement allowance) and the same costs go by other names elsewhere, such as a service charge. Lease law differs by country and state too, so treat the notes as a guide to what to ask and have a lawyer who handles commercial leases read the draft.
The questions
Each question, and why to ask it
Rent and charges
What is the base rent, and how was the rentable square footage measured?
Why ask it
Rentable square footage usually includes a share of lobbies, corridors and restrooms, so the space you can actually work in is smaller than the number on the quote. Ask which measurement standard was applied and what the usable figure is, then work out the rent per usable foot, which compares two buildings more fairly than the quoted rate does.
Is this a gross lease, a modified gross lease, or triple net?
Why ask it
This single answer decides whether the quoted rent is close to your real monthly cost or only one part of it. Under a triple net lease, taxes, insurance and maintenance arrive as separate charges. The labels are used loosely from one landlord to the next, so have each cost sorted into two columns: inside the rent, or billed on top.
What do the CAM or operating charges cover, and what were they per square foot in each of the last three years?
Why ask it
Three years of actual figures show the trend, which is the part nobody volunteers. An estimate for next year on its own can hide a jump from a recent roof job, a tax reassessment or a new management fee.
How much does the rent increase each year, and is the increase a fixed percentage or tied to an index?
Why ask it
A fixed bump lets you budget the whole term, while an increase tied to an index hands you an unknown unless it has a ceiling. On a gross lease, check whether rises in operating costs above a base year are billed as well, since that makes the real increase larger than the headline percentage.
What will my total monthly cost be once operating charges, taxes, insurance and utilities are added to the base rent?
Why ask it
Ask the broker to write this out for the first year as one figure, with each line shown beneath it. That total is what you set against your sales forecast, and it is the fair way to compare an office quoted gross with a retail unit quoted triple net.
Is there a cap on how much the operating charges can rise from one year to the next?
Why ask it
Without a cap, your share of a repaving job or a jump in the insurance premium lands in a single year. Landlords often agree to cap the charges they control, such as management and maintenance, while leaving taxes and insurance outside it, so ask which lines the cap would cover.
How is my share of the operating charges worked out, and does it change when part of the building is empty?
Why ask it
Your share is normally your square footage divided by the building's, and the bottom number is the one to check. Some leases divide by leased space only, so every remaining tenant's share grows as neighbors move out. Have the percentage and both figures behind it written into the lease.
Can I review the records behind the operating charges, and how long do I have to dispute the year-end reconciliation?
Why ask it
Estimated charges are trued up after the year closes, and the bill for the difference can arrive months later. An audit right with a workable deadline is what lets you question a line that does not look right; without one you are paying on trust.
Are management or administrative fees added to the operating charges, and how are they calculated?
Why ask it
A fee set as a percentage of all operating costs grows every time another cost does, including ones the landlord chose to incur. Find out the percentage, what it is applied to, and whether it is charged on top of taxes and insurance as well.
Which utilities are metered to this suite alone, and how are the shared ones divided among tenants?
Why ask it
A split by square footage means a quiet office helps pay for the restaurant or the server room next door. If the suite has no meter of its own, ask what the previous occupant paid each month and whether a submeter can be installed.
If the property is sold and reassessed, how much of a higher tax bill would pass through to me?
Why ask it
In some places a sale resets the assessed value, and the increase flows straight into the tenants' share of taxes. How reassessment works depends on the state or country, so ask how it works there and whether the landlord would shield you from an increase that follows a sale.
What insurance does the lease require me to carry, and at what limits?
Why ask it
Liability limits, coverage on your own build-out and business interruption cover are commonly written into the lease, and the premium is part of your occupancy cost. Send the insurance section to your own agent for a quote before you agree to the limits.
Is there percentage rent on top of the base rent, and how are gross sales defined?
Why ask it
Some retail leases take a share of sales above a set threshold. The definition is where the money is: ask whether online orders collected in store, gift cards, delivery sales and returns are counted, and how often you would have to report.
Space and use
Is my intended use permitted under the zoning and the building's certificate of occupancy?
Why ask it
The landlord may not know, and under many leases the rent is owed whether or not the city lets you open. Hearing that a previous tenant did something similar is not the same as a permitted use, so confirm it with the local planning or zoning office yourself.
How will the permitted use be worded in the lease, and is it broad enough for services I might add later?
Why ask it
A clause that names one activity can stop you adding a product line, a second service or evening classes without the landlord's consent. Bring a sentence of your own that describes where the business is heading and see how much of it survives.
Will you give me an exclusive, so that no other unit in this property is leased to a direct competitor?
Why ask it
Without one, a similar business can open two doors down and the lease may give you no remedy. The answer also reveals which exclusives existing tenants already hold, and those may restrict what you are allowed to sell.
Who is the anchor or largest tenant, when does its lease end, and what happens to my rent if it leaves?
Why ask it
A small shop in a center often depends on the traffic a grocery or department store draws. A co-tenancy clause, which reduces rent or lets you leave if the anchor goes dark, is the usual protection, and it is far easier to obtain before you sign than after the anchor announces a closure.
Does the lease require me to keep set opening hours or to stay open for the whole term?
Why ask it
Shopping centers often set the hours every tenant must be open, holidays included, and a continuous operation clause can make closing a failing shop a default even while you pay the rent. Get the required hours in writing and price the staff needed to cover them.
Can I see the building's rules and regulations, and can you change them during my term?
Why ask it
The rules usually sit in an exhibit at the back of the lease and cover the daily things: where staff park, when contractors may work, what goes in the windows, how trash, noise and cooking smells are handled. Many leases let the landlord amend them by notice, so ask that any new rule apply to every tenant alike and not cut across your permitted use.
What foot traffic or vehicle counts do you have for this location, and where do the numbers come from?
Why ask it
A count from a mobile data service, a traffic study and a broker's impression are three different grades of evidence. Whatever you are shown, stand outside at the hours you plan to be open and count for yourself, once on a weekday and once on a weekend.
What signage am I allowed, and who has to approve it?
Why ask it
Retail and service businesses live on visibility, and sign rights are often controlled by both a landlord criteria document and a municipal ordinance. Ask for the criteria themselves, not a summary of them, and check whether you would get a panel on the shared sign by the road.
How many parking spaces come with this suite, are they reserved, and what happens as the building fills up?
Why ask it
A parking ratio quoted for the whole property tells you nothing about what is free outside your door at noon. Visit at your own busiest hour before accepting the number.
What electrical capacity serves this suite, and who pays if my equipment needs more?
Why ask it
Kitchen equipment, kilns, compressors, server racks and salon dryers can each exceed what a standard panel was built for. Give the landlord your equipment list early, because an upgrade to the service can be among the largest costs of a build-out and the slowest to schedule with the utility.
How do deliveries reach the space, and are there set hours for the loading dock or freight elevator?
Why ask it
A retail unit with no rear door takes every pallet through the front, past customers. In a multi-story office, ask whether the freight elevator must be booked and paid for, since that also governs move-in day and every furniture delivery after it.
How many people is this suite approved to hold?
Why ask it
The occupancy limit under the fire or building code can be lower than the number of desks or seats a floor plan appears to fit, and it can turn on the exits and restrooms as much as the floor area. If your plan needs more people than the current figure, find out from the local building department what it would take to raise it before you sign.
Build-out
In what condition will the space be handed over: as is, as a bare shell, or with specific work finished by you?
Why ask it
Terms like vanilla shell and warm shell mean different things to different landlords. Ask for a written list of what will be in place on delivery day, down to the ceiling grid, the lighting, the restrooms and whether the HVAC is distributed or only stubbed in.
What tenant improvement allowance comes with the space, and who hires and supervises the contractor?
Why ask it
Who controls the build-out matters more than the dollar figure. A landlord-managed build-out on a tight allowance tends to produce the cheapest compliant finish, while a tenant-managed one leaves you carrying overruns and permit delays.
What can the allowance be spent on, and is it paid as the work proceeds or only after I open?
Why ask it
Some allowances exclude furniture, cabling, signage and design fees, which leaves those bills entirely with you. An allowance reimbursed at the end also means you finance the whole job first, so ask what paperwork releases the money and how many days it takes.
If the city requires accessibility, fire or code upgrades to permit my build-out, who pays for them?
Why ask it
Triggering a code review is common when you change the layout or the use, and the bill can dwarf the improvement budget. Where the lease says nothing, expect the landlord to treat it as the tenant's cost, so get the split written down before the plans go to the city.
Is there anything in the history of this space, such as asbestos, an old grease trap or a former dry cleaner, that would affect construction?
Why ask it
Hidden conditions are a frequent reason a build-out overruns its schedule and its budget. Ask for any survey or environmental report the landlord holds, and who pays for removal if something turns up once the walls are open.
What approvals do I need from you before altering the space, and how long do you take to review drawings?
Why ask it
A review period with no deadline can stall a build-out for weeks while rent runs. Ask for a set number of days, and find out whether you must use the building's own contractors for mechanical, electrical or roof work and whether a supervision fee is charged on top.
Does rent start on a fixed date or when the space is actually ready, and what happens if permits or your work run late?
Why ask it
A fixed start date puts every permit delay on your account while the doors are still shut. Tying the first rent payment to delivery of the space, or to the day you open for business, shares that risk instead of leaving all of it with you.
Is there any rent-free period while I build out and move in?
Why ask it
Free rent during the build-out is a common concession, so it is worth asking for even when none has been offered. Check whether operating charges are abated too, because paying CAM on an empty shell for three months is a real cost.
At the end of the lease, which improvements stay with the building and which do I have to remove?
Why ask it
Returning the space to its original condition can mean tearing out the very walls, wiring and plumbing you paid for. Have the required end condition described before you design anything, and ask the landlord to mark on the plans which items will have to come out.
Repairs and services
Who is responsible for repairing the HVAC, the roof, the plumbing and the parking lot?
Why ask it
In many small commercial leases the tenant is quietly made responsible for the rooftop unit serving their suite, which can be a very large bill. Ask for the answer by system and by dollar threshold, not as a general assurance that maintenance is handled.
How old is the HVAC equipment serving this suite, and when was it last serviced?
Why ask it
Age tells you whether a replacement is likely to land during your term. With no service records to show, it is safer to assume the unit has been run hard and to negotiate either a landlord repair obligation or a cap on your share of capital work.
If a major system has to be replaced during my term, do I pay for it outright, or is the cost spread over its useful life?
Why ask it
A tenant with two years left should not buy the building a roof or a chiller that will serve it for decades. Spreading a capital cost over the life of the equipment, with you paying only for the years you occupy, is a common compromise and a fair one to propose.
Who do I call when something breaks, and how quickly were the last few repair requests handled?
Why ask it
The property manager, not the person showing you the space, is who you will live with for the term. Ask whether management is on site or remote, then put the same question about response times to a tenant already in the building.
Which services are included in what I pay: cleaning, trash, snow removal, landscaping, pest control?
Why ask it
Office leases often include nightly cleaning of the suite, and retail leases usually do not. The same goes for restrooms: shared ones are cleaned through the operating charges, while those inside your suite are normally yours to maintain and stock. Anything missing from the list is a contract to arrange yourself, so price those before comparing two spaces.
What hours is the building open and conditioned, and what does after-hours HVAC cost?
Why ask it
In many office buildings the heating and cooling shut off in the early evening and barely run on weekends, which is unworkable if your staff or clients come in late. After-hours air is usually billed by the hour, so get the rate and the minimum charge.
Which internet providers already serve the building, and can I bring in a line of my own?
Why ask it
For an office this decides whether you can work on day one. Some buildings have a single provider under an exclusive arrangement, and a new fiber line can take weeks and need the landlord's consent to run through the riser. Settle who pays for that work before you pick a move-in date.
Has this space had roof leaks, flooding, mold or pests, and what was done about each?
Why ask it
Look up while you ask: stained ceiling tiles and patched drywall answer faster than the broker does. A problem that was fixed, with an invoice to show for it, is far less worrying than one waved away as a one-off.
What security does the property have, and what incidents were reported here in the past year?
Why ask it
Cameras, lighting, patrols and door access are either in the operating charges or left to each tenant. In some places the police will tell you about calls to an address, which is a useful check on a reassuring answer, and your insurer may ask the same thing.
If a fire or flood makes the space unusable, does my rent stop, and how long do you have to rebuild before I can end the lease?
Why ask it
Casualty clauses vary widely, and some keep the tenant paying while the landlord decides whether to rebuild at all. You are looking for rent that abates from the day of the damage and a firm date after which you may walk away. Read the clause beside your business interruption policy.
Are major works planned for the building, the parking lot or the street during my term, and how would access to my unit be protected?
Why ask it
Scaffolding over a storefront or a closed entrance can cut sales for months, and the lease may give you nothing for it. Press for what the landlord knows of its own plans and the city's, and whether rent would be reduced if customers cannot reach the door.
Term and exit
How long is the initial term, and do I have a renewal option at a rate set in advance?
Why ask it
An option to renew at market rate secures your right to stay but not the price, and by then moving would cost you your customers. A stated rent or a capped increase written into the lease now is worth more. If the landlord insists on market rate, pin down how it would be determined and by whom.
How far ahead must I give notice to use the renewal option, and what happens if I miss the date?
Why ask it
Notice windows often open and close many months before the term ends, and under plenty of leases a missed date means the option is simply gone. Put the deadline in your calendar the day you sign, with a reminder well ahead of it.
Can I have a right to end the lease early, and what would the fee be?
Why ask it
A termination right with a stated fee turns an open-ended liability into a number you can plan around. Landlords usually price it as the unrecovered cost of the allowance and commissions plus some months of rent, so ask to see how the figure is built.
If I outgrow the suite, do I get the first chance at adjoining space when it comes free?
Why ask it
A right of first offer costs the landlord little and can save you a move. Ask who occupies the neighboring suites and when their leases end, since the right is only worth something if space is likely to open up during your term.
Can I sublease or assign the lease, and what happens if I sell the business?
Why ask it
An assignment clause requiring landlord consent at their sole discretion can block the sale of your company years from now. Ask for consent that cannot be unreasonably withheld, and check whether a change of ownership counts as an assignment.
Can you move me to a different suite during the term, and who pays if you do?
Why ask it
Relocation clauses let a landlord shift a small tenant to make room for a larger one. If the clause cannot be struck, ask for comparable size and visibility, every moving and rebuilding cost paid, and enough notice to tell customers. For a shop, a move to the back of the center is a different business.
What counts as a default, and how many days do I have to fix one before you can act?
Why ask it
The remedies section is where a late payment can become a lockout or a demand for all the remaining rent. Ask for written notice and a cure period for both money and non-money defaults, and have a lawyer explain what a landlord may actually do in your state or country.
What is the holdover rent if I stay past the end of the term while a new space is being finished?
Why ask it
Holdover rent is usually set at a multiple of the base rent, and construction delays on a next space are common. Knowing the multiple now tells you how much schedule buffer to build into a future move, and it is easier to negotiate down today than in the last month of the term.
If the building is sold or the lender forecloses, does my lease carry on as written?
Why ask it
Whether a lease survives a foreclosure depends on local law and on what the lender has agreed to. Ask if the landlord's lender will sign a non-disturbance agreement, and get your lawyer to explain how this works where the property is.
Negotiating
Which terms in this lease are open to negotiation, and which have you never changed for any tenant?
Why ask it
Asking it this way gets a more useful answer than asking whether the lease is negotiable, which always draws a yes. The items a landlord refuses to touch tell you what the owner or the lender cares about, and that is where to stop spending effort.
What concessions have tenants who signed here recently received: free rent, an allowance, a cap on charges?
Why ask it
The listing broker may not say, but the question signals that you know concessions exist. A tenant's broker of your own, or a neighbor in the building, can often tell you what the last few deals looked like.
How long has this space been vacant, and how many other suites in the property are empty?
Why ask it
Vacancy is your leverage. A unit that has sat dark for a year is costing its owner money every month, and a landlord in that position will usually bend further on free rent and build-out than on the face rate, which feeds into what the building is worth.
Which tenants have left this property in the last two years, and why did they go?
Why ask it
This is the question that surfaces the problems a tour cannot: flooding, break-ins, an absent property manager, foot traffic that never materialized. A landlord who cannot name any departures, in a property with visible vacancy, is worth pressing.
Will you require a personal guaranty, and will it reduce or end after a period of on-time payments?
Why ask it
A personal guaranty can put your home and savings behind the business, so the useful question is not only whether you can avoid it but whether it burns off. Some landlords will accept a guaranty limited to a set number of months of rent, though seldom before the tenant raises it.
How much is the security deposit, and what specifically has to be true for me to get it back?
Why ask it
Ask where the deposit is held, whether it can step down after a clean payment record, and whether a letter of credit would be accepted in its place. The conditions for its return usually point straight at the restoration and repair clauses, so read those together.
Will you put the agreed terms in a letter of intent before the lease is drafted?
Why ask it
A letter of intent is usually written to be non-binding, yet it is the summary both lawyers draft from. Check that it names the free months, the allowance and who replaces the HVAC, and have your lawyer confirm that no part of it would bind you where the property is.
Do you represent only the landlord, and if I bring a broker of my own, who pays their fee?
Why ask it
The person touring you through the space is usually paid by the owner to get the best deal for the owner. How a tenant's broker is paid varies by market, so ask how it works locally before assuming representation costs you nothing.
How long will my lawyer have to review the draft, and am I expected to cover your legal costs for changes?
Why ask it
Some leases charge the tenant for the landlord's attorney time on every requested change, which discourages asking. A week or two for review is a reasonable request, and pressure to sign faster than that deserves a question about why.
Who makes the final decision on this lease: the owner, an asset manager, or a lender who has to approve it?
Why ask it
A broker can agree to a point that a committee or a lender later reverses. Knowing who approves the deal tells you how long a counteroffer will take and whose concerns your proposal has to answer.
Working through a commercial lease
Practical guidance for the conversation itself
How to run the conversation
Ask for the draft lease early, then ask questions against it
What a leasing broker tells you on a tour and what the lease says can be two different things, and only the lease counts. Request the landlord's standard form before you negotiate, read the maintenance, operating expense and default sections, and turn anything unclear into a written question.
Convert every answer into a monthly number
Base rent, operating charges, after-hours HVAC, utilities, insurance and your share of taxes together give total occupancy cost. Compare properties on that figure per usable square foot, never on the headline rent.
Get answers in writing before the letter of intent
The letter of intent is where allowances, free rent, renewal rates and repair duties get fixed. Anything agreed only in conversation tends to disappear when the lawyers draft, and reopening it later costs you leverage.
Bring in a broker who does not represent the landlord
Tenant representation is often paid out of the landlord's commission, though the custom varies by market, so ask how the fee works before you engage one. A local broker also knows what concessions the property has given other tenants, which is information you cannot get from a tour.
Order to ask them in
First tour, before you get attached to the space
- 1Is this a gross lease, a modified gross lease, or triple net?
- 2What do the CAM or operating charges cover, and what were they per square foot in each of the last three years?
- 3Is my intended use permitted under the zoning and the building's certificate of occupancy?
- 4How many parking spaces come with this suite, are they reserved, and what happens as the building fills up?
Second conversation, once the space is a serious candidate
- 1Who is responsible for repairing the HVAC, the roof, the plumbing and the parking lot?
- 2How old is the HVAC equipment serving this suite, and when was it last serviced?
- 3What tenant improvement allowance comes with the space, and who hires and supervises the contractor?
- 4If the city requires accessibility, fire or code upgrades to permit my build-out, who pays for them?
Before signing, the questions about getting out
- 1Will you require a personal guaranty, and will it reduce or end after a period of on-time payments?
- 2Can I sublease or assign the lease, and what happens if I sell the business?
- 3How much is the security deposit, and what specifically has to be true for me to get it back?
- 4What is the holdover rent if I stay past the end of the term while a new space is being finished?
Where small tenants get caught
Comparing base rents across different lease types
A triple net rate and a gross rate are not comparable numbers. Two spaces quoted at the same rent per square foot can be far apart in what you actually pay each month, so put both on a total cost basis before you rank them.
Treating restoration as a distant problem
Restoration clauses are agreed at signing and paid five or ten years later, when the money is tightest and you are also funding a move. Negotiate the required end condition now, while the landlord wants your signature.
Signing a term longer than your plan
A five year term on a business two years old is a bet on a forecast. If the landlord will not shorten the term, ask instead for an early termination right with a stated fee, which prices the risk rather than hiding it.
Accepting a use clause narrower than your business
The use clause follows the lease to whoever takes it over. Wording that fits your shop exactly can rule out a buyer or subtenant whose business differs slightly from yours, which matters most on the day you want to sell or sublet. Draft it for the widest category the landlord will accept, not for this year's menu of services.
Office, retail or workshop: where to press
Renting office space
Office quotes are more often gross or full service, so the questions that matter are what the load factor adds to your square footage, when the heating and cooling run, what after-hours air costs, and how good the internet and the elevators are. Size the suite for the desks you expect in two years, not the ones you have today.
Leasing retail space
Retail is usually quoted triple net, and the lease reaches into how you operate: required opening hours, percentage rent, exclusives, co-tenancy and sign criteria. Visibility, parking at your busiest hour and the health of the anchor matter more than the finish of the unit.
Workshop, studio or light industrial units
Power, floor loading, ceiling height, ventilation, drainage and truck access decide whether the space works at all, and zoning decides whether you may do the work there. Bring your equipment list to the first viewing and collect the landlord's answer on each item in writing.
Negotiating a commercial lease as the small tenant
You will rarely move the face rent far, because it feeds into what the building is worth on paper. Free rent, a larger allowance, a cap on controllable charges, a guaranty that burns off and a softer assignment clause are where a landlord has room, so rank those before you counter and trade away the ones you care about least.