How to Review a Commercial Lease: Key Clauses for Small Businesses

A commercial lease is one of the largest financial commitments a small business makes. Unlike residential leases, commercial leases are heavily negotiable.

Rent Structure

Gross lease: flat monthly rent, landlord pays expenses. Net lease (NNN): base rent plus property taxes, insurance, and maintenance. Percentage lease: base rent plus a percentage of gross sales. NNN charges can add 30-50% on top of base rent.

Term and Renewal

Negotiate renewal options that lock in rent increase rates rather than adjusting to market rate. Include an early termination clause with defined penalties.

Permitted Use and Exclusivity

The permitted use clause defines what business you can conduct. An exclusivity clause prevents the landlord from leasing to a direct competitor — important in retail and food service.

Maintenance

Clarify who handles maintenance, repairs, and capital improvements. Review CAM charges — they should be capped and auditable.