By: Owner & Attorney, Michael Jonas, JD, MBA
Whether you're opening your first storefront, expanding to a new location, or just moving into a better space, signing a commercial lease is a big step. It’s also very different from signing a residential lease: more negotiable, more complex, and often longer-term.
Below are a few key things to keep in mind before you sign, but fair warning—this is definitely not an exhaustive list. Every lease and every business is different. Use this as a starting point, and be sure to consult a qualified attorney to make sure your specific needs are covered.
1. Everything is (Usually) Negotiable
Don’t assume the lease is a take-it-or-leave-it situation. Commercial landlords often expect some negotiation. That could include rent, build-out allowances, maintenance responsibilities, signage rights, or even early termination clauses.
2. CAM Charges Can Add Up
Common Area Maintenance (CAM) fees can be vague and expensive. They may include costs for things like landscaping, shared utilities, security, or even property management salaries. Ask what’s included and how these fees are calculated.
3. The Fine Print Has Teeth
Clauses around default, rent increases, subleasing, or "as-is" conditions can come back to bite you. Some of these terms are easy to miss and even easier to misunderstand until it’s too late.
4. Contingencies Matter
Before you sign, consider what your lease should be contingent upon. For example, will you need financing to cover your tenant improvements or renovations? A loan contingency can give you time to secure funding before the lease becomes binding. You may also want contingencies tied to permitting, zoning approval, business licensing, architectural approvals, or landlord repairs. Without clear conditions, you may be stuck paying for space you can’t legally or financially use.
5. Zoning Matters
Just because a landlord is leasing you space doesn’t mean your intended use is allowed there. Check local zoning regulations and permitted uses before signing. Your dream yoga studio shouldn't turn into a compliance nightmare.
6. Personal Guarantees Are Serious
This is one of the most overlooked and most important parts of many commercial leases. A personal guarantee means that if your business can’t pay the rent, you are personally on the hook. That could put your personal bank account, savings, or even your home at risk. It’s not uncommon for landlords to ask small businesses or startups to sign one, especially if your business is new or doesn’t have a long financial track record. But the terms can vary widely, and in some cases, a limited or time-bound guarantee may be negotiable. Don’t sign a personal guarantee without fully understanding what you're committing to.
7. Who’s Paying for Improvements?
Thinking about repainting, building out a kitchen, or adding walls and lighting? That’s where tenant improvements (TIs) come in. These can be a major expense and a major source of confusion. Ask whether the landlord will provide a TI allowance or if you're expected to pay for everything. Who manages the work—you or the landlord? Do you need approval first? What happens to the improvements when the lease ends? Even small upgrades can create big legal or financial issues later. Get it in writing.
8. Permitted Use: Get Creative, But Be Clear
The permitted use clause might sound like a formality, but it can limit what you’re allowed to do in your own space. Many leases use generic language like “retail use” or “office use,” which might not cover the full range of your business plans—like pop-up markets, artist showcases, small events, or community programming. If your vision includes rotating offerings or hybrid models, be specific. For example: “Use as a community-focused retail and creative space, including but not limited to retail sales, pop-up markets, art installations, food and beverage service (non-commercial kitchen), and hosted public or private events.” This kind of flexibility up front can prevent a lot of back-and-forth later.
9. Maintenance and Repairs Might Be on You
Unlike residential leases where the landlord handles most repairs, commercial tenants are often responsible for maintaining the space—including expensive systems like HVAC, plumbing, and electrical. This can become a financial burden, especially if you don’t know the current condition of those systems when you sign. If the air conditioner breaks two months in and the lease says you're responsible, that could be thousands out of pocket. Ask questions, request inspection reports, and consider bringing in a professional before signing. Also check for language around repair versus replacement—sometimes you’re responsible for both.
10. It’s Not a One-Size-Fits-All Agreement
Each business has unique needs. A creative office suite might require different terms than a coffee shop or a nonprofit clinic. A boilerplate lease may not serve your best interests and might leave gaps that cause problems later.
Final Thought: Talk to a Lawyer Before You Sign
We understand that launching or expanding a business already comes with a long to-do list. But this is not something you want to DIY. A commercial lease is one of the most important contracts your business will enter into. We can help you read and review it, write suggested revisions, explain what’s worth pushing for, and help you choose your battles if the landlord doesn’t want to accept every change. You don’t need a 20-page legal memo-sometimes a focused strategy session is enough. A little help now can save a lot of stress later.
