Commercial Lease Negotiation Checklist: 10 Things to Ask for Before You Sign
The first draft of every commercial lease is written by the landlord's attorney. It protects the landlord. Print this checklist, bring it to your negotiation, and ask for every item on it. Each one has saved tenants thousands of dollars.
How to use this checklist:
For each item below, check whether your lease includes it. If it does not, use the suggested language to request it. You will not get all 10 — but you should ask for all 10. Landlords expect negotiation. The tenants who pay the most are the ones who never ask.
1. Rent Escalation Cap
What it is: A ceiling on how much your base rent can increase each year.
Why it matters: Without a cap, a landlord can tie annual increases to CPI with no maximum, meaning your rent could jump 6-8% in a single year instead of the 3% you budgeted.
What to ask for: "Annual rent increases shall not exceed 3% per year, regardless of CPI index movement." On a $5,000/month lease over 5 years, capping escalations at 3% instead of allowing uncapped CPI saves you up to $4,800 in cumulative rent.
2. CAM Charge Cap
What it is: A limit on how much your Common Area Maintenance charges can increase annually.
Why it matters: CAM charges are the most common source of surprise costs in commercial leases. Landlords pass through property taxes, insurance, landscaping, and repairs — and without a cap, these charges can spike 15-20% in a single year after a property tax reassessment or major repair.
What to ask for: "Annual CAM increases shall be capped at 5% over the prior year's actual charges, on a non-cumulative basis." On $800/month CAM charges, this cap saves you up to $9,500 over 5 years compared to uncapped charges.
3. Personal Guarantee Burn-Off
What it is: A schedule that reduces or eliminates your personal guarantee over time as you demonstrate reliable payment history.
Why it matters: A full personal guarantee on a 5-year, $6,000/month lease means you are personally liable for up to $360,000 if your business closes on day one. Without burn-off, that exposure stays the same on year four as it was on day one.
What to ask for: "Personal guarantee shall reduce to 12 months of remaining rent after 24 consecutive months of timely payment, and shall terminate entirely after 36 months of timely payment." This limits your maximum personal exposure from $360,000 to $72,000 after two years, and to zero after three.
4. Security Deposit Reduction
What it is: A clause that returns a portion of your security deposit after you prove you are a reliable tenant.
Why it matters: Commercial security deposits often equal 2-3 months of gross rent. On a $7,000/month lease, that is $14,000-$21,000 in capital sitting in the landlord's account earning you nothing for the entire lease term.
What to ask for: "Security deposit shall reduce by one month's rent after each 12-month period of timely payment, to a minimum of one month's rent." This frees up $7,000-$14,000 in working capital over the first two years.
5. Renewal Rent Method
What it is: The formula that determines your rent when you exercise a renewal option.
Why it matters: Many leases set renewal rent at "fair market value" — determined by the landlord. This gives the landlord full control over your renewal rate and eliminates the leverage your renewal option was supposed to provide.
What to ask for: "Renewal rent shall be the lesser of (a) fair market value as determined by an independent MAI-certified appraiser, or (b) the then-current base rent plus 3%." This ensures your renewal rate stays competitive even if the landlord's idea of "market" is inflated.
6. Early Termination Right
What it is: The right to exit your lease before the term expires, typically with a fee.
Why it matters: Without an early termination clause, you are liable for the entire remaining rent if your business needs change. On a $5,000/month lease with 3 years remaining, that is $180,000 in obligation with no exit.
What to ask for: "Tenant may terminate the lease after month 24 upon 6 months' written notice and payment of an early termination fee equal to 3 months' base rent plus unamortized tenant improvement costs." A $15,000 termination fee is far better than $180,000 in remaining obligation.
7. Holdover Rate
What it is: The rent rate charged if you remain in the space past your lease expiration date.
Why it matters: Landlord-drafted leases commonly set holdover at 150-200% of the final month's rent. If your build-out at a new location runs two weeks past your move-out date on a $6,000/month lease, holdover at 200% costs you $6,000 in penalty rent for those two weeks alone.
What to ask for: "Holdover rent shall be 110% of the then-current base rent for the first 60 days, increasing to 150% thereafter." At 110%, those same two weeks cost $1,650 instead of $6,000 — a $4,350 difference.
8. Subletting and Assignment Rights
What it is: Your right to sublet part of your space or assign the lease to a new tenant (such as a buyer of your business).
Why it matters: If you sell your business, the buyer needs to assume your lease. If the lease prohibits assignment without landlord consent — and the landlord can withhold consent for any reason — the sale can fall apart, or the landlord can demand a rent increase as a condition of approval.
What to ask for: "Landlord's consent to subletting or assignment shall not be unreasonably withheld, conditioned, or delayed. Assignment to a purchaser of Tenant's business shall be permitted without consent provided the assignee meets reasonable financial criteria." This protects your exit value.
9. Exclusivity Clause
What it is: A restriction preventing the landlord from leasing other spaces in the same property to businesses that directly compete with yours.
Why it matters: Without an exclusivity clause, a landlord can lease the unit next to your coffee shop to another coffee shop. You signed a 5-year lease based on certain foot traffic assumptions, and the landlord has zero obligation to protect your competitive position.
What to ask for: "Landlord shall not lease any space within the property or shopping center to a tenant whose primary business is [your business category]. In the event of a violation, Tenant's rent shall abate to 50% of base rent until the competing use ceases." The rent abatement provision gives the clause teeth.
10. Relocation Clause Protection
What it is: Limits or eliminates the landlord's right to move you to a different unit in the building or property during your lease term.
Why it matters: Some landlord-drafted leases include a relocation clause that allows the landlord to move you to a "comparable" space at any time. You invested $30,000 in build-out for a corner unit with street visibility, and the landlord can relocate you to an interior unit to accommodate a larger tenant.
What to ask for: "Delete the relocation clause entirely." If the landlord refuses: "Any relocation shall require Tenant's prior written consent, Landlord shall pay all moving and build-out costs, and rent shall not increase for the relocated space." At minimum, never accept a relocation clause without full cost reimbursement.
Want to know which of these your lease is missing?
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Upload your lease for a full analysisFrequently Asked Questions
What are the most important things to negotiate in a commercial lease?
The 10 most important items are: rent escalation cap, CAM charge cap, personal guarantee burn-off, security deposit reduction, renewal rent method, early termination right, holdover rate, subletting and assignment rights, exclusivity clause, and relocation clause protection. Each of these can save $5,000-$100,000+ over the lease term.
Can you negotiate a commercial lease after the landlord sends it?
Yes. The first draft of a commercial lease is written by the landlord's attorney and favors the landlord on nearly every term. Tenants are expected to negotiate. Most landlords anticipate 1-3 rounds of revisions. Signing the first draft without negotiation is the most expensive mistake a commercial tenant can make.
How do I know which lease terms to negotiate first?
Start with the items that have the largest financial impact over the full lease term: rent escalation caps, CAM charge caps, and personal guarantee scope. Then address protective clauses like early termination rights and holdover rates. An AI lease analysis ($75) can identify which specific terms in your lease are below market and prioritize them by dollar impact.