Most commercial lease advice says "negotiate." Few sources say what normal is, and that is what you need before you can tell whether a clause is standard or a problem. This page puts the market standard next to the tenant-friendly version and the red flag for the clauses that cost small business tenants the most money.
How to read this. These benchmarks are the consensus of commercial real estate attorneys and small-business advisors (sources linked under each section). No national survey tracks small-tenant lease terms, so treat them as rules of thumb, not guarantees. Norms vary by market, property type, and how much leverage you have. They are US-focused, and state law can override them (see the end of the page).
The quick benchmark table
| Lease term | Market standard | Tenant-friendly | Red flag |
|---|---|---|---|
| Rent escalation | ~3% fixed per year (2-3% office/industrial); CPI capped at 3-5% | 2.5% or less, or bumps every 2-5 years | Over 4% fixed, or uncapped CPI |
| Security deposit | 1-3 months' rent | 1 month or less, or burns down over time | Over 3 months plus a personal guarantee |
| Holdover rent | 150-200% of last base rent | 125-150%, or graduated | Over 200%, or applied to rent plus all pass-throughs |
| Personal guarantee | Required for most small tenants | Capped (6-24 months' rent), burn-off, or "good guy" | Unlimited, full term plus renewals, spouse must sign |
| CAM admin fee | 10-15% of common area costs | 10% or less | Over 15%, or stacked on a management fee |
| CAM cap (if any) | 3-5% per year on controllable costs (often none in retail) | 5% or less, non-cumulative | "All costs of the property" with no exclusions |
| Renewal options | 1-2 five-year options at fair market value | Fixed or capped renewal rent | Rent "to be agreed", or no option for a heavy build-out |
| Assignment / subletting | Consent "not unreasonably withheld" | Sale of your business allowed without consent | Landlord's sole discretion, and selling the business counts as an assignment |
| Monetary default cure | 3-10 days after written notice | 10+ days after notice | No notice or cure period at all |
| Non-monetary default cure | 30 days, extended while you diligently cure | 30+ days plus extension | Under 10-15 days |
| Radius restriction (retail) | 1-5 miles (3 is most common) | None, or 3 miles or less | Over 5 miles, or covers your affiliates |
| Early termination | Usually none for small tenants | Any tenant termination right | Landlord can terminate for redevelopment without paying you |
Rent escalation
Market: A fixed increase of about 3% per year is the most common structure. Office and industrial leases often run 2-3%. When a lease uses the Consumer Price Index instead, it is usually written as "the lesser of CPI or X%" with a cap of 3-5%.
Tenant-friendly: 2.5% or less, increases every two to five years instead of annually, or CPI with a cap of 3% or lower and no floor.
Red flag: A fixed increase above 4%, CPI with no cap, or "the greater of CPI or 3%" (a floor with no ceiling).
On a lease starting at $5,000 per month, 5% annual increases instead of 3% add about $66,800 in rent over 10 years ($754,700 vs. $687,800) — before any operating cost pass-throughs.
Sources: Metro Manhattan Office Space, Century 21 Commercial. Related: rent escalation clauses explained.
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Personal guarantee
Market: Landlords ask almost every new or small business, including LLCs, for a personal guarantee. An unlimited guarantee for the full term is the landlord's opening position. Most small tenants who negotiate get one limit.
Tenant-friendly: No guarantee; a cap of roughly 6 to 24 months of rent; a burn-off after 2-3 years of on-time payments (for example 24 → 18 → 12 → 6 → 0 months); a "good guy" guarantee that ends when you give notice and hand back the keys; or release of the guarantor when you sell the business.
Red flag: Unlimited, joint and several, covering renewal terms, surviving an assignment, waiving your defenses as a guarantor, or requiring your spouse to sign.
An unlimited guarantee combined with a clause that accelerates all remaining rent on default is the single largest financial exposure in most small-business leases. On a 5-year lease at $6,000 per month, that can mean a personal claim of $300,000+ if the business fails early.
Sources: SCORE, Bay Legal, DHC Legal. Related: personal guarantees explained, burn-off provisions.
Operating expenses and CAM
Market: In NNN and retail leases, you pay your pro-rata share of operating costs, usually with no cap. Caps are uncommon in retail. When a cap exists, it covers only "controllable" costs at 3-5% per year, and excludes taxes, insurance, and utilities. Administrative fees run 10-15% of common area costs. Major capital items should be spread over their useful life rather than billed in one year. You should get an annual right to audit the landlord's statement.
Tenant-friendly: A non-cumulative cap of 5% or less on controllable costs; written exclusions for capital improvements, leasing commissions, debt service, the landlord's own negligence, and executive salaries; an admin fee of 10% or less; at least 12 months to audit; and the landlord pays for the audit if it finds an overcharge above 3-5%.
Red flag: "Tenant pays its share of all costs of the property" with no definition; a new roof or parking lot billed to tenants in the year it is built; admin fees above 15% or charged on top of a management fee; no audit right, or fewer than 30-60 days to object before the statement is final.
Sources: Cox Castle, Holland & Knight, Lowndes. Related: CAM charges explained, how to audit CAM charges.
Repairs and HVAC
Who pays for repairs depends on the lease type, so "normal" depends on what you signed.
- NNN: You maintain your premises, including HVAC. The landlord usually keeps the roof, structure, and foundation.
- Modified gross: Negotiable; structure usually stays with the landlord.
- Full-service gross (most office): The landlord maintains building systems.
Tenant-friendly: The landlord warrants HVAC, roof, and plumbing are in working order at move-in (often for 12 months); the landlord pays for HVAC replacement; or your share of a replacement is limited to the months left on your lease.
Red flag: You must replace HVAC, the roof, or structural elements on a short lease, especially when you accept the space "as-is" with old equipment, or you pay for code upgrades to problems that existed before you moved in. A single rooftop HVAC replacement can cost $10,000-$50,000.
Sources: Holland & Knight. Related: NNN vs. gross leases.
Holdover rent
Market: 150% to 200% of your last month's base rent if you stay after the lease ends without a new agreement. 150% is the tenant-side norm; 200% is common in landlord forms.
Tenant-friendly: 125-150%, or a graduated rate (for example 125% for the first 30-60 days); the multiplier applies to base rent only; no liability for the landlord's lost deals unless you stay 30+ days after notice.
Red flag: More than 200%, a multiplier on base rent plus all pass-through charges, or immediate liability for consequential damages.
Sources: McDonald Hopkins, Mintz & Gold. Related: holdover provisions explained.
Security deposit
Market: One to three months of rent, more for startups. Most states don't cap commercial deposits.
Tenant-friendly: One month or less, a deposit that burns down after on-time payments, or a letter of credit instead of cash.
Red flag: More than three months and a personal guarantee, a non-refundable portion, or no deadline for returning it.
Sources: Aquila Commercial. Related: security deposits explained.
Assignment and subletting
Market: You need the landlord's consent, which "shall not be unreasonably withheld", often with a landlord right to take the space back (recapture) and a share of any sublease profit. In California, courts imply a reasonableness standard when a lease requires consent but says nothing about the standard.
Tenant-friendly: A deadline after which consent is deemed given; transfers to affiliates or to a buyer of your business allowed without consent; release from liability when a qualified assignee takes over.
Red flag: Consent in the landlord's "sole and absolute discretion", especially when selling your business or changing ownership counts as an assignment. That can make your business very hard to sell.
Sources: Bay Legal, Association of Corporate Counsel. Related: subletting and assignment explained, selling a business with a lease.
Renewal options
Market: One or two five-year options at fair market value, often with a floor of "not less than the last year's rent". You exercise by written notice 6-18 months before the lease ends.
Tenant-friendly: Two or three options, renewal rent fixed in the lease or capped, and a defined process for setting fair market value.
Red flag: Renewal rent "to be agreed" (often unenforceable), an option that disappears after any past late payment even if you fixed it, or no renewal option at all when you are paying for a major build-out.
Sources: Minden Gross, SCORE. Related: renewal options explained.
Default, cure periods, and acceleration
Market: 3-10 days to pay late rent after written notice; 30 days to fix other defaults, extended while you are working on it. Clauses that let the landlord demand all remaining rent at once are common in landlord forms, but many states enforce them only if the amount is discounted to present value and credited for what the landlord earns by re-renting.
Red flag: No notice or cure period for late rent, under 10-15 days for other defaults, or acceleration of all remaining rent with no discount and no credit for re-renting. A confession of judgment (common in Pennsylvania) lets the landlord get a court judgment against you without a hearing and is a deal-breaker for most tenants.
Sources: Jordan Ramis, Bean Kinney, Barley Snyder. Related: default and remedies.
Retail-only terms: exclusivity, radius, co-tenancy
- Exclusivity: Small tenants usually get none unless they ask. A good one defines your primary use and reduces your rent if the landlord breaks it. ABA
- Radius restriction: 1-5 miles is typical for neighborhood retail (3 is most common). More than 5 miles, or a restriction that covers your affiliates, is worse than market. Lorman
- Co-tenancy: Usually only national tenants get it. Not having one is normal. Seyfarth Shaw
Related: exclusivity clauses, radius restrictions, co-tenancy clauses.
State law changes the baseline
- California: Pre-dispute jury trial waivers are unenforceable. SB 1103 (effective 2025) adds notice and documentation protections for qualifying small businesses, restaurants, and nonprofits. Buchalter
- Texas: Landlords have an automatic statutory lien on a tenant's property for rent. Texas Property Code §54.021
- Pennsylvania: Watch for confession-of-judgment clauses.
- New York: "Good guy" guarantees are standard.
Want to know how your lease compares? LeaseLens reviews your full lease clause by clause against these market standards and shows the benchmark next to every finding, so you can see exactly what to negotiate.