Everything brokers wish you knew before you signed your first lease. Plain English. No jargon.
01 — Lease Types
Not all leases are structured the same. The type of lease determines who pays what — and the difference can be hundreds of dollars per month.
Most common for industrial and commercial space. You pay base rent plus the building's property taxes, insurance, and maintenance costs.
Good for landlords. Be aware of what NNN adds to your number — always ask for an itemized breakdown.
All-inclusive rent. Landlord covers taxes, insurance, and maintenance. You pay one flat monthly number and nothing else.
Good for budgeting certainty. Less common for industrial space but worth asking for.
Split responsibility, negotiated between landlord and tenant. You pay base rent plus some operating costs — the split varies by lease.
Good for commercial spaces and converted commercial properties. Read the lease carefully.
No fixed term. Either party can terminate with 30 days notice. Typically carries a 10–20% premium over a standard lease rate.
Good for short-term needs. Costs more. Gives you the least security. Landlord can terminate anytime.
02 — Total Occupancy Cost
The number on the listing is never what you actually pay. Here is every cost you need to budget for before signing.
| Cost Item | What It Covers | Typical Amount |
|---|---|---|
| Base Rent | The number on the listing | $2,000/mo |
| NNN Charges | Taxes, insurance, maintenance | +$150–$300/mo typical |
| Utilities | Electric, gas, water | +$200–$800/mo depending on use |
| Renter's Insurance | Required by most landlords | +$50–$150/mo |
| Build-Out Costs | Amortized if you paid upfront | Varies |
| TOTAL | Your real monthly number | $2,400–$3,250/mo example |
03 — True Cost Calculator
Enter the numbers from any listing to see your real all-in cost. Updates live as you type.
Ask the landlord. Typically $1.50–$4.00/SF/yr for industrial.
Higher for welding, auto, fabrication. Lower for storage/office.
Get a quote. Usually $50–$150/mo.
Typically 1–2 months rent.
If required by landlord.
Print this page or screenshot your numbers before you call the landlord.
04 — Terms Decoded
Here are the terms that matter most for small industrial and commercial space — explained without the jargon.
The usable vertical space from floor to the lowest obstruction — a beam, duct, or sprinkler head. Not the ceiling height. A 20-foot ceiling with 14-foot beams has 14 feet of clear height. This matters for lifts, racking, and large equipment.
The overhead door for vehicle and equipment access. Width and height both matter. A 10×10 door fits most pickup trucks and small equipment. 12×14 fits larger vehicles and vans. Ask: how many, what size, and whether they are grade-level or dock-high.
Electrical service that delivers three alternating currents instead of one. Required for most commercial equipment — welding machines, air compressors, CNC machines, car lifts, large HVAC. If you need it and the space does not have it, bringing it in can cost $5,000–$25,000.
How much electrical capacity the space has. 100A is standard residential. 200A handles most light commercial uses. 400A+ is needed for heavy fabrication, multiple large machines, or EV charging. Ask for the panel size — not just "3-phase available."
The additional charges on top of base rent covering the landlord's property taxes, building insurance, and common area maintenance. Billed monthly, reconciled annually. Get an itemized breakdown before signing — NNN can vary significantly by building.
Common Area Maintenance. Applies in multi-tenant buildings — your proportional share of maintaining shared areas like parking, landscaping, and exterior lighting. Usually included in NNN. Ask what is in CAM and what is excluded before signing.
You personally agree to pay the lease even if your business fails. Most commercial landlords require it. You can negotiate a cap (12–24 months) or a "burn-off" where the guarantee reduces over time.
The date your rent obligation begins. Not the same as your possession date — when you get the keys. Negotiate free rent during any build-out period so you are not paying rent on a space you cannot yet use.
Money the landlord contributes to build out the space. Rare in small industrial but more common in commercial space. Usually $5–$20/SF if offered. Always get it in writing with a detailed scope of work — verbal TIA commitments evaporate.
In a gross or modified gross lease, the year used as the baseline for operating cost increases. If costs exceed the base year amount, you pay the difference. Understand this before signing any long-term gross lease.
What happens if you stay past your lease end date without a new agreement. Most leases convert to month-to-month at 125–150% of your last rent. Give proper notice before your lease ends — the cost of holdover adds up fast.
A document you may be asked to sign confirming your lease terms are as stated. Required when a landlord refinances or sells the property. You must sign accurately — errors can affect your tenancy and the transaction.
05 — Zoning & Use
Verify zoning before you sign anything. A verbal "it should be fine" from a landlord is not verification.
Typical uses: Light manufacturing, warehousing, contractors, auto repair, printing, small fabrication.
Usually prohibits: Heavy processing, hazardous materials, outdoor storage (sometimes).
Most commercial industrial space is I-1. This is the most common zone for contractors and trades.
Typical uses: Heavy manufacturing, metal fabrication, concrete, asphalt, recycling, some chemical processing.
More flexible on outdoor storage and noise levels.
Less common for small spaces. Broader permitted uses if you need them.
Typical uses: Retail, office, light service businesses. Some commercial spaces fall here.
Usually prohibits: Auto repair, welding, manufacturing, loud equipment.
Check carefully if your use makes noise, has emissions, or involves heavy equipment.
Zoning varies significantly. Could be commercial, industrial, or a hybrid designation.
Best practice: Get the exact parcel's zoning classification from the county assessor and verify your specific use is permitted before you negotiate.
06 — Negotiating
Most small tenants do not know this. Here is what to ask for — and how to ask for it.
Ask for 1–2 months free at the start to cover build-out and move-in time.
When to ask: Always. Even in tight markets landlords will give 30 days free for a 2-year commitment.
Lock in your right to renew at a defined rate before you sign.
Why it matters: Without it, the landlord can double your rent or simply not renew.
The right to exit the lease early with notice and a buyout fee.
Why it matters: Businesses change. A 3-year lease with no exit is a personal guarantee with no escape valve.
Typical buyout: 2–4 months rent plus unamortized TIA.
Get specific about who fixes what. Key items to define: HVAC, roof, plumbing, electrical, parking lot.
Rule: If it is not defined in the lease, assume you are responsible. Vague language always favors the landlord.
The right to lease adjacent space before it is offered to other tenants.
Why it matters: If you grow, you do not want a stranger next door when you need to expand your footprint.
Limit your personal exposure to 12–24 months of rent instead of the full lease term.
07 — Subletting
Know your rights before you need them. Negotiating subletting rights costs nothing upfront and can save you enormously later.
You lease your space to another party while remaining responsible to the landlord. You are the sublandlord. The new tenant is your subtenant. You still owe rent whether they pay or not — your liability to the original landlord does not change.
Assignment: You transfer your entire lease to a new tenant. You are released from obligation (if the landlord agrees). Used primarily when selling a business.
Subletting: You retain responsibility. The subtenant pays you. You pay the landlord. Used when you need to exit early or share space temporarily.
Ask for an explicit subletting clause before you sign. Most landlords will allow it with their written consent — get that right in the lease itself.
Watch for: "Landlord may withhold consent in its sole discretion" — this gives them complete control. Push for "consent not to be unreasonably withheld."
Most commercial landlords will approve a subtenant with similar creditworthiness and use. They want rent paid — they usually do not care who pays it, as long as the use is appropriate and the space is not damaged.
08 — Exit Options
The worst time to negotiate exit terms is after you need them. Know your options before you commit.
Give written notice 30–60 days before expiration (check your lease for the exact requirement). Do not assume auto-renewal does not apply — read the holdover clause. Restore the space to its original condition unless your lease says otherwise.
If you negotiated one: pay the buyout fee, give required notice, exit cleanly. If you did not negotiate one: you owe rent for the remainder of the term unless the landlord finds a replacement tenant. Some states require landlords to mitigate damages by actively trying to re-lease.
Subletting: Find a qualified subtenant, get landlord approval in writing, document everything. You remain liable if they default.
Assignment: Transfer the lease entirely — typically used when selling your business. Requires landlord consent. Frees you from future obligation if properly documented.
Go to the landlord directly. Offer a lump sum to terminate early. Landlords in tight markets may accept 3–6 months rent. In soft markets they may want more. Always get the termination agreement in writing and confirm you have no further obligation before you vacate.
If you stop paying, the landlord can pursue the full remaining term plus legal fees. Your personal guarantee is the mechanism. Do not let it reach this point. Communicate with the landlord early — most prefer a negotiated exit to a lawsuit.
09 — Due Diligence
Complete every item on this list before you put pen to paper. Skipping any of them is how costly surprises happen.
10 — Red Flags
Not every problem is a deal-breaker — but every item below is worth pausing on before you commit.
"Tenant responsible for all repairs" with no cap or exclusions. This can mean you pay for a roof replacement on a building you do not own.
You are committed for the full term with no escape. This should be non-negotiable on any lease over 12 months — push for an early termination clause.
Your lease renews automatically unless you give 90 days notice. Easy to miss. Locks you in for another full term at potentially higher rent.
No cap, no time limit, no burn-off clause. You are personally liable for every dollar for the full term and beyond. Always negotiate a cap.
They either do not have them or the bills are high enough that they do not want you to see them. Walk away or insist on an escrow holdback.
"We'll fix that before you move in." If it is not in the lease it does not legally exist. Get every commitment documented in writing.
"I'm sure it's fine" is not confirmation. Get written approval from the planning department — or factor the risk into your decision.
Good spaces do lease fast in tight markets. But artificial urgency is a classic pressure tactic. Take the time to read the full lease regardless.
If you move in mid-month you should pay only for the days you occupy. Some landlords try to charge a full first month regardless of possession date.
Your deposit should be held in a separate trust or escrow account. Ask for written confirmation of where it is held and under what conditions it can be used.
11 — Glossary
Plain-English definitions for every term you will encounter when leasing commercial space.
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