There’s a moment in every lease negotiation that feels a little like the fourth quarter. The landlord’s broker slides over a form lease, forty pages long, and says something like, “This is our standard lease.” It sounds final. It isn’t.
Standard just means it’s the version written for the landlord. Almost everything in it can be discussed. Here are the twelve negotiation questions we hear most, and what’s realistic to ask for.
Question 24 of 50
Is a commercial lease negotiable?
Short answer: Yes. Nearly every commercial lease term is negotiable, including rent, annual increases, free rent, tenant improvement allowance, lease length, renewal options, personal guarantees, repair responsibilities, signage, use rights, and exit options. How much you can win depends on market conditions, the space’s vacancy time, and your financial strength.
Leverage comes from alternatives. A landlord who knows you’re seriously considering two other spaces negotiates differently than one who knows you’ve fallen in love with theirs. That’s one reason to tour more than one space, even if you already have a favorite. See our breakdown of what’s negotiable.
Question 25 of 50
What is a letter of intent (LOI) for a commercial lease?
Short answer: A letter of intent is a short, usually non-binding document that outlines the main business terms of a lease, such as rent, term, concessions, improvements, use, and options, before the full lease is drafted. It’s where most of the negotiating leverage lives, so key terms should be settled at the LOI stage.
Once the LOI is signed, the landlord’s attorney drafts the lease from it. Anything you didn’t ask for in the LOI gets much harder to add later. A strong LOI covers:
- Premises, square footage, and how it’s measured
- Base rent, escalations, and NNN estimate
- Free rent and when rent starts
- Tenant improvement allowance and who builds
- Term, renewal options, and early termination rights
- Use clause, exclusives, and signage
- Deposit and guarantee terms
- Contingencies (permits, CUP, financing, licensing)
Question 26 of 50
What is a tenant improvement (TI) allowance and how much can I get?
Short answer: A TI allowance is money the landlord contributes toward building out your space, usually quoted per square foot. The amount depends on lease term, your credit, the space’s condition, and the market. Longer terms and stronger tenants typically earn larger allowances, and second-generation spaces usually get less.
Things to nail down besides the dollar amount:
- What the allowance can pay for (construction only, or also design, permits, cabling, signage)
- How and when it’s paid (reimbursement after completion, or progress draws)
- Whether unused allowance can become free rent
- Who manages construction and whether the landlord charges a supervision fee
More detail in our TI allowance guide.
Question 27 of 50
Can I get free rent on a commercial lease?
Short answer: Often, yes. Free rent (also called abated rent) is commonly negotiated to cover buildout time or as an incentive on longer leases. A frequent starting point in many markets is about one month per year of lease term, and a separate rent commencement date tied to permits or opening can protect you during construction.
Watch the difference between the lease commencement date (when the lease starts) and the rent commencement date (when you start paying). The gap between them is where your buildout happens. Also ask whether “free rent” includes NNN charges or just base rent.
Question 28 of 50
How long should my commercial lease term be?
Short answer: Most small business leases run 3 to 5 years for office and retail and 10 years or more for restaurants and medical practices with heavy buildout. Shorter terms keep flexibility, while longer terms earn more concessions. A common strategy is a shorter initial term paired with renewal options.
Match the term to the money you’re putting into the walls. If you’re investing $200,000 in a kitchen, you need enough years to earn it back, and you need renewal options so the landlord can’t take that kitchen back after year five.
Question 29 of 50
What are renewal options in a commercial lease?
Short answer: A renewal option gives you, not the landlord, the right to extend the lease for a set period, such as two 5-year options, at a rent defined in the lease. Options protect your location and investment. You must exercise them in writing within a specific notice window, often 6 to 12 months before expiration.
How the option rent is set matters. “Fair market value” can mean a big jump. A fixed increase or FMV with a cap gives you more certainty. And the notice window is strict: miss it by a day and the option can be gone. Calendar it the day you sign.
Question 30 of 50
Do I have to sign a personal guarantee on a commercial lease?
Short answer: Many landlords request a personal guarantee from small business owners, especially newer businesses, but the scope is negotiable. Alternatives include a guarantee capped at a set dollar amount or number of months, a guarantee that burns off after a period of on-time payments, a larger deposit, or a letter of credit.
A personal guarantee means your house, savings, and personal credit can be on the hook if the business can’t pay. Before you sign one, ask for:
- A cap (for example, 12 months of rent)
- A burn-down after 2 to 3 years of on-time payments
- Release if the lease is assigned to a qualified buyer
- A “good guy” structure where your liability ends once you vacate with notice and rent paid through move-out
Full guide: personal guarantees.
Question 31 of 50
What is an exclusive use clause?
Short answer: An exclusive use clause prevents the landlord from leasing other space in the same property to a business that competes with yours. For example, a coffee shop might secure the exclusive right to sell espresso drinks in the center. It’s one of the most valuable protections for retail, restaurant, and service businesses.
Define it tightly and specifically. “Coffee shop” is easy to argue around. “The sale of espresso-based beverages, except incidental sales below 10 percent of a tenant’s gross revenue” holds up better. Also confirm your own use doesn’t violate someone else’s existing exclusive. See our exclusive use resource.
Question 32 of 50
Can I sublease or assign my commercial lease?
Short answer: Most leases allow subleasing or assignment only with landlord consent. Negotiate for consent that can’t be unreasonably withheld, the right to assign to a buyer of your business, and release from liability after an approved assignment. Under California law, if a lease requires consent without stating a standard, consent generally can’t be unreasonably withheld.
If you ever plan to sell your business, this clause is your exit ramp. A buyer can’t take over your location if the landlord can simply say no. Push for permitted transfers to affiliates and business buyers without consent, or with consent limited to a financial test.
Question 33 of 50
Who pays for HVAC and roof repairs in a commercial lease?
Short answer: It depends on the lease. In most NNN leases the tenant maintains HVAC serving its space, while the landlord handles the roof and structure and passes some costs through CAM. Negotiate a cap on HVAC replacement costs, a warranty on systems at delivery, and clear language separating repair from capital replacement.
A 15-year-old rooftop unit can cost $10,000 to $20,000 or more to replace. If the lease says you “maintain, repair, and replace” it, that bill is yours, even in year one. Ask for:
- Landlord warranty on HVAC, electrical, plumbing, and roof for the first 6 to 12 months
- A cap on your annual HVAC repair spend
- Landlord responsibility for replacement, or amortization over the unit’s useful life
Question 34 of 50
What is a relocation clause in a commercial lease?
Short answer: A relocation clause lets the landlord move your business to another space in the same property. It’s common in multi-tenant office and retail centers. Negotiate to remove it or limit it with comparable space, landlord-paid moving and buildout costs, rent no higher than current, advance notice, and your right to terminate instead.
For a storefront business, a relocation clause can quietly undo everything you chose the space for: visibility, frontage, foot traffic. If it can’t come out, make it expensive and inconvenient for the landlord to use.
Question 35 of 50
What happens if my business fails or I need to leave early?
Short answer: You typically stay responsible for rent through the end of the term unless the lease gives you a way out. Protections to negotiate up front include an early termination option with a set fee, the right to sublease or assign, a capped or burn-down personal guarantee, and a co-tenancy clause in retail centers.
Nobody signs a lease planning to leave. That’s exactly why exit terms are easier to negotiate on day one than in year three. If you’re already in a lease and need out, options include negotiating a buyout, finding a subtenant, or assigning to a buyer. Read more in exit options.
Frequently asked questions
Is an LOI legally binding?
Usually not, except for specific provisions like confidentiality or exclusivity. Its terms still shape the lease, so treat it seriously.
Should I negotiate a lease renewal?
Yes. A renewal is a new negotiation, and the landlord’s cost of losing you is real leverage.
Can I ask for signage rights?
Yes. Building, window, monument, and pylon signage should be written into the lease, subject to city approval.
What's the most overlooked clause?
Often the renewal option notice deadline. Missing it by a day can cost the option entirely.
If you could change one term in a lease you’ve signed before, which one would it be?
