What’s negotiable in a commercial lease

Money

• Base rent and how it steps up over the term (escalations).
• Free rent. Months with no base rent, often at the start.
• Fixturing period. Time to build out before rent begins, separate from free rent.
• Tenant improvement (TI) allowance. Money from the landlord toward your build-out, usually per square foot.
• Landlord’s work. What the landlord builds or fixes before you move in, and to what standard.
• Deposit size, and when it comes back.
• Caps on operating cost increases, or exclusions for things like major repairs, capital upgrades or the landlord’s own financing costs.
• Admin or management fees charged on top of operating costs.

Flexibility

• Renewal options. One or more, at a set rent or a defined “fair market” method, with a reasonable notice deadline.
• Assignment and sublet rights, including a release of you and your guarantors when you assign. Selling your business later depends on this.
• Early termination rights, sometimes with a fee.
• Expansion rights or a right of first refusal on neighbouring space.
• Relocation and demolition clauses. Limit them, or add long notice and compensation.

Protection

• Personal guarantee. Cap it, limit it to a number of months of rent, or have it fall away after a period of on-time payments.
• Exclusive use. Stop the landlord leasing to a direct competitor in the same property.
• Signage, parking, hours and access.
• Restoration. Limit what you have to remove or rebuild when you leave.
• Measurement. Confirm how the area was measured and the load factor. See load factor explained.

How to get it

You don’t win every point. You pick the few that matter most to your business, ask early, and give the landlord things that cost you little, like a longer term or a quicker decision. Landlords tend to say yes to free rent and allowances before they move on face rent. How landlords think explains why.