Tips to Negotiating a Commercial Lease

Before starting the negotiation process, complete your due diligence — both on your own space needs and on the commercial real estate market you're entering. Since you're probably not doing office leases every day, it's worth taking time to understand the location and surrounding market before you're deep into a conversation with a landlord.

The most effective way to do this is to involve a local broker who works in that specific area and space type regularly. Understanding the market — what brokers call "comps," meaning recent comparable deals — helps you or your advisor craft realistic, well-supported terms when it's time to negotiate.

As you move into discussions with a potential landlord, keep in mind that the length of your lease is likely the single most significant factor in getting the terms you want.

Decide what lease term actually makes sense for your business, then see what's available in the market at that length. Options exist at every term, but your ability to customize the space — new flooring, lighting, finishes — and secure meaningful discounts tends to shrink on shorter terms. Once you understand where the market sits for your desired term, you can use additional term as a bargaining chip: trading a longer commitment for the specific concession you need, or to meet a minimum-term requirement on a building you've fallen for.

A tenant improvement allowance is a landlord-funded contribution toward build-out costs, typically expressed on a per-square-foot basis. It's one of the most negotiable line items in any lease — and one of the most commonly under-negotiated.

In markets with elevated vacancy, landlords are actively competing to fill space and are often willing to increase TI packages meaningfully rather than lose a deal. Push for this during letter of intent (LOI) negotiations — before you're committed to the space — since your leverage largely disappears once the lease is signed.

Most commercial leases include annual rent increases, whether a fixed percentage, a CPI-based adjustment, or a pass-through of rising operating expenses. Left unchecked, these compound meaningfully over a multi-year term.

Negotiate a defined annual cap — commonly 3–5% on controllable operating expenses — rather than accepting an open-ended escalation clause. Most landlords will agree to a reasonable cap if you ask directly; the mistake most tenants make is not asking at all.

Before agreeing to final contract terms for your commercial space, make sure every deal point is actually included in the lease itself — not just discussed and documented throughout negotiations.

This may sound obvious, but you don't want a landlord responsibility or deal point that mattered to you — one you actually won in negotiation — to get lost between the closing process and checks being cut. If you're working with a tenant rep, they'll typically cross-check the business points discussed throughout the process against the final lease language. It's also worth having an attorney review the full contract before you sign.

Let a Tenant Rep Negotiate on Your Behalf

Connect with a local tenant rep who already knows the comps, the TI packages landlords are offering, and how hard to push — at no direct cost to you in most U.S. markets.

Frequently Asked Questions