Reading a Commercial Lease

The terms that matter most, no matter which side of the table you are on.

Commercial leases are longer and potentially more negotiable than most people expect. Whether you are a landlord drafting terms or a tenant reviewing them, these are the sections worth slowing down for.

Base Rent Versus Effective Rent

The headline rent number is not always the full story. Escalations, free rent periods, and tenant improvement allowances all affect what a lease actually costs or earns over the lease term. Always calculate the effective rent across the full lease period, not just year one.

Who Pays For What

Triple net, modified gross, and full-service leases all divide expenses, taxes, insurance, and maintenance differently. Both sides should understand exactly what is included before signing, since this is where disputes most often start.

Renewal Options and Escalation Clauses

For tenants, a renewal option protects your location without locking you into today's market rate. For landlords, clear escalation language protects your return over a long lease term. Both should be specific, with exact percentages or formulas, not vague language.

Use Clauses and Exclusivity

Landlords want flexibility for future tenants. Tenants, especially retail tenants, often want exclusivity so a landlord cannot lease the space next door to a direct competitor. This is frequently negotiable and worth addressing directly rather than leaving ambiguous.

Exit and Default Terms

Understand what happens if either side needs out early, subletting rights, assignment clauses, and default remedies. These are the terms nobody wants to think about until they need them.

A well-negotiated lease protects both sides for years. As a boutique, full-service brokerage, Navigate works with landlords and tenants to review terms and negotiate on your behalf. Schedule a consultation to talk through what is standard, what is negotiable, and what is worth pushing back on.