Commercial Lease Negotiation Template

Most tenants focus on rent per square foot and term length. Experienced negotiators know those are just two of 20+ terms that materially affect your total occupancy cost and operational flexibility. This template covers each one with market benchmarks and negotiation guidance.

Base Rent & Escalation

Term	Market Benchmark	What to Negotiate
Base rent	Varies by market (check CBRE/JLL reports)	Compare net effective rent (accounting for free rent and TI), not just face rate
Annual escalation	2.5-3.5% fixed or CPI-based	Fixed escalations are more predictable. CPI caps (e.g., "CPI not to exceed 4%") protect against inflation spikes
Free rent / abatement	1 month per year of term	A 5-year lease should yield 4-5 months of free rent. Push for front-loaded abatement to offset move-in costs

Tenant Improvement Allowance (TI / TIA)

Market range: $30-80/SF for Class A, $15-40/SF for Class B, depending on market and term length
Amortized vs. upfront: If landlord amortizes TI into rent, calculate the implied interest rate. Rates above 8% may make self-funding cheaper.
Scope of work: Clarify whether TI covers only "hard" construction costs or also "soft" costs (design, permitting, furniture, cabling). Push for all-inclusive TI.
Unused TI: Negotiate the right to apply unused TI to rent credits, furniture, or cabling — don't leave money on the table.
Construction management fee: If landlord manages construction, their fee is typically 3-5% of project cost. If you manage, you keep that fee but take on coordination risk.

Operating Expenses & CAM

Gross vs. NNN: In a gross lease, operating expenses are included in rent. In a NNN (triple net) lease, you pay base rent plus your pro-rata share of property taxes, insurance, and maintenance. NNN is more common; understand your share.
Base year / stop: In a gross lease with a base year, you pay the base year's operating expenses in your rent, plus your share of increases above that year. Negotiate a base year that reflects normal expenses (avoid a year with unusually low taxes).
Expense caps: Negotiate annual controllable expense increases capped at 4-5%. Exclude capital expenditures from pass-throughs — those are the landlord's investment in their asset.
Audit rights: Insist on the right to audit the landlord's operating expense records annually. 15-20% of commercial tenants who audit find overcharges.

Term & Flexibility

Renewal options: 1-2 renewal options at "fair market rent" (FMR) or a fixed rate. If FMR, negotiate a cap or a defined appraisal process. Give yourself at least 9-12 months' notice period.
Early termination: A termination option (typically exercisable after year 3 of a 5-year deal) gives you flexibility. Cost is usually 3-6 months' rent plus unamortized TI and commissions.
Expansion rights: Right of first refusal (ROFR) on adjacent space, or a right of first offer (ROFO). ROFO is better — you get to name your terms before the landlord markets the space.
Contraction rights: The ability to give back a portion of your space mid-term. Rare but valuable for uncertain growth.
Sublease / assignment: Right to sublease without landlord consent (or with consent not to be unreasonably withheld). This is your safety valve if business needs change.

Building Operations

HVAC hours: Standard is Mon-Fri 8am-6pm, Sat 8am-1pm. After-hours HVAC rates vary wildly — ask for the hourly rate in writing before signing.
Parking ratio: Market standard is 3-4 spaces per 1,000 SF. Verify whether parking is included, reserved, or at additional cost.
Signage rights: Building directory, suite entry, and (if you're a large tenant) building exterior or monument signage. Get signage specs in the lease, not a side letter.
Access: 24/7/365 building access is non-negotiable for most tenants. Confirm in writing.

Protective Clauses

Exclusivity: If applicable, restrict the landlord from leasing to a direct competitor in the same building.
Non-disturbance (SNDA): A Subordination, Non-Disturbance, and Attornment Agreement protects you if the building is sold or the landlord's lender forecloses. Get this signed before move-in.
Casualty / condemnation: Right to terminate if the building is significantly damaged and not restored within a defined period (typically 180-270 days).
Landlord default: Define remedies if the landlord fails to maintain the building — self-help rights, rent offset, or lease termination after notice and cure period.

This template is educational guidance. Lease negotiations should involve a commercial real estate attorney and, ideally, a tenant rep broker who can provide market-specific data.