Can I negotiate a commercial lease?

Business lease negotiation basics

We negotiate every day—at work, at home, with friends. The same basic principles apply to lease negotiations:

• Do your research.
  Knowledge strengthens your position and helps prevent misinformation.
• Mentally prepare.
  Negotiations can get tense, and a calm mindset makes a difference.
• Understand the other side.
  Knowing a landlord’s goals and limits helps you find common ground.

Your goal isn’t to “win” the lease. It’s to reach an agreement that works for both you and the landlord. Keep the golden rule of negotiation in mind: don’t give without getting. Aim to trade value for value, and you’ll set the stage for a fair, balanced deal.

Step 1: Check your position and leverage

Start by understanding your bargaining power. A few key factors can determine how much flexibility you have at the negotiating table.

• Your experience matters.
  Established businesses with good credit usually have more bargaining power than new companies.
• So does property demand.
  If a space has been vacant for months, you can often ask for more concessions.

Before you start these conversations, do your market research. Compare local listings, rent per square foot, and included amenities to get a sense of what’s fair for your area. Knowing the market strengthens your position and helps you make realistic requests.

Step 2: Understand common lease structures

Commercial lease agreements are usually priced by square footage and billed annually. Most follow one of two structures:

Gross lease: A single flat rate that covers rent and most property expenses, such as taxes, insurance, and maintenance. Some gross leases, especially full-service ones, may also include utilities and janitorial services.

Triple Net (NNN) lease: A lower base rent, but tenants pay additional costs separately, including utilities, maintenance, cleaning, insurance, and property taxes.

Step 3: do your due diligence

Before signing anything, make sure that the property fits your business needs and there are no surprises hiding in the fine print.

• Verify zoning and permits allow your intended use.
  Make sure your business type is permitted in the space. For example, a building zoned for “office use” might not allow a sandwich shop or retail boutique.
• Review building condition, taxes, and utility accounts.
  Inspect the property carefully for maintenance issues, like HVAC, plumbing, or roof condition, and confirm that utilities are current. Request tax records and any outstanding assessments so you’re not hit with back payments or sudden increases.
• Check public records for lawsuits or eviction filings against the landlord or management company.
  Court databases or county records can reveal red flags like ongoing disputes, unpaid taxes, or a history of tenant conflicts. Address concerns early to avoid problems later.
• Confirm environmental and safety compliance.
  Ensure the space meets fire, accessibility (ADA) and environmental health standards. Look for water damage, mold, or hazardous materials that could delay move-in or end up costing you money later.

Step 4: consider the legal context

In most states, including Utah and Arizona, commercial leases are treated as contracts between two businesses. That means landlords and tenants have the freedom to set their own terms, and courts generally enforce those terms as written, as long as both parties act in good faith (honestly, fairly, and without intent to deceive). This freedom isn’t unlimited, though. Any lease term must still comply with state and federal law.

Some states, such as California, New York, and Washington, have limited rules that can affect commercial leases. In Washington, for example, landlords must give reasonable notice before ending certain commercial tenancies, as outlined in RCW 59.04.020.

Check for any state-specific rules that apply to commercial leases. Still, the general rule holds: commercial leases usually come down to what’s written in the agreement, not verbal promises or assumptions.

financial terms

• Base Rent and Rent Increases
  Your rent sets the foundation for your entire lease. If the property’s been vacant or you’re willing to sign a longer term, you may be able to negotiate a lower starting rent or gradual increases. Ask that rent adjustments be clearly defined, predictable, and tied to a clear index rather than a vague “market rate.”
• Free Rent Periods
  Landlords sometimes offer rent-free periods during the initial build-out, renovation, or setup of your business. Even a few weeks of reduced or no rent can help offset moving costs, equipment setup, or early budget challenges. If you’re signing a multi-year lease, ask if this concession can be added at the beginning, or even at the renewal stage.
• Tenant Improvements (TI) Allowance
  A TI allowance is the landlord’s contribution toward customizing the space to meet your business needs. You can negotiate the total amount, how it’s paid, and what it covers, from flooring and lighting to paint and build-out of offices or restrooms. Determine whether the landlord or you will oversee the construction and who owns the improvements when the lease ends.
• Security Deposit
  Security deposits and their terms are negotiable. You might offer a higher deposit to get better rent or ask for a partial refund after a proven payment record. Be sure the lease says when and how your deposit will be returned and under what conditions.
• Operating Costs
  Clarify what property expenses you’ll pay beyond base rent and whether any caps apply to annual increases. Operating costs often include Common Area Maintenance (CAM), property taxes, and building insurance. CAM covers upkeep for shared spaces like hallways, parking lots, and landscaping. Costs can fluctuate, so ask for annual expense statements, audit rights, or limits on how much they can rise year after year.

Lease use and duration

• Timeline
  Most commercial leases run 3 to 10 years. Longer commitments often lead to better rates, while shorter terms offer flexibility if your plans change. Make sure renewal terms are clearly outlined from the start, including how rent will change over time.
• Use Clause
  The use clause defines what type of business activity is allowed. Make sure that any restrictions that could limit your operations or future expansion are spelled out. Make sure the property’s zoning and permits align with your business plan before signing.
• Exclusivity Clause
  If competition is a factor, ask for language preventing the landlord from renting nearby space to direct competitors. An exclusivity clause is a protection that’s especially important in shopping centers or shared environments. Ask for language that defines what counts as “competition” and covers the entire property, not just your building.
• Signage Rights
  Signage is an often overlooked but valuable part of your lease. Confirm your right to display business signage in visible and compliant locations. Negotiate placement and lighting rights early in the process.

Flexibility and exit clauses

• Renewal Options
  A renewal option gives you the right, not the obligation, to extend your lease. This provides security if your business is thriving and continuity if you need more time. Negotiate how long you’ll have to renew and how future rent will be determined to avoid unexpected increases.
• Subletting and Assignment
  Make sure that your lease includes a sublease agreement that gives you the option to sublet or transfer your lease if your business changes. This flexibility can be a lifesaver if you outgrow the space or need to downsize.
• Termination Clauses
  A termination or “exit” clause defines when you can end the lease early, such as losing permits or facing major business disruptions. This protection can help you avoid long-term financial strain if circumstances change unexpectedly.
• Maintenance and Repairs
  Define who’s responsible for what. Landlords usually handle structural elements like roofs and plumbing, while tenants handle interiors and janitorial work. This helps prevent disputes and surprise expenses.
• Co-Tenancy Clauses (Retail)
  For retail tenants, consider a co-tenancy clause allowing termination or rent reduction if an anchor tenant leaves. Empty neighboring stores can mean fewer customers, so this clause can keep your lease sustainable.