A commercial lease is usually the longest contract a small business ever signs. In the US, most of them run three to ten years, with five years the most common term for office and retail space, according to Docusign’s commercial lease guidance. That’s five years of rent you owe whether the business works or not.
So the review you do before signing matters more than almost anything you’ll negotiate afterward. And it matters double if goods leave your building. If you’re a bakery loading vans at 5am, a florist running Valentine’s routes, or a wholesaler shipping cases to accounts, half the clauses that decide whether you can actually operate that way are buried in paragraphs most tenants skim.
This guide goes through what to look for in a commercial lease, clause by clause, and what each one costs you if you get it wrong.
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The Bottom Line
- Read the permitted use clause first. It decides whether you can legally run wholesale, catering, or delivery out of the space at all. Everything else is negotiable detail.
- Rent is not the number in the rent clause. Add CAM, taxes, insurance, and any percentage rent to get your real monthly cost.
- Check hours and loading access before you fall in love with the space. A building that locks its dock at 6pm doesn’t work for a 4am prep kitchen.
- Find the personal guaranty. If one is in there, your house backs the lease, not just the company.
- Know your exit before you sign. Assignment, subletting, and early termination are what you’ll reach for if the business changes.
Start with the permitted use clause
The use clause, sometimes called “permitted use” or just “use”, states exactly what you’re allowed to do in the space. It’s the clause that quietly decides whether your business model is legal on that floor.
Written narrowly, it will hurt you. As Hollander Real Estate Law notes, when a permitted use clause is too narrow, tenants face real operational risk: if a business pivots, expands its offerings, or adjusts its model, a restrictive use clause may prohibit those changes entirely.
For anyone shipping orders out, that risk is specific. A clause that says “retail bakery” may not cover wholesale accounts. “Café” may not cover catering. “Restaurant” may not cover a delivery-only menu run out of the same kitchen. Smith, Gambrell & Russell’s guidance on use provisions makes the point that landlords draft these clauses tightly on purpose, to keep control over what happens in the building.
Ask for language broad enough to hold your next two years, not just your opening week. “Bakery, including wholesale production and off-premises delivery” is a different lease from “retail bakery.” Widening that sentence is one of the cheapest asks you’ll make, and how to negotiate a commercial lease walks through how to raise it without spooking the landlord.
While you’re in this section, look for the exclusive use clause too, the one that stops the landlord leasing to a direct competitor next door. Nolo’s breakdown of use and exclusive clauses is a good primer on how the two interact. Exclusivity is worth real money in a shopping center and almost nothing in a standalone industrial unit.
Work out the real cost of the lease, not just base rent
The rent clause gives you base rent. Base rent is rarely what you pay.
What you owe depends on the lease structure. In a gross lease, the landlord covers most operating costs out of your flat payment. In a net lease (single, double, or triple) you pick up taxes, insurance, and maintenance on top. In a percentage lease, common in shopping centers and restaurant space, you pay base rent plus a slice of your sales above a threshold.
That last one deserves care if a chunk of your revenue arrives by van or by app, because the lease’s definition of “gross sales” may sweep in delivery and online orders you assumed were outside it. We cover the mechanics, the breakpoint math, and how to get that revenue carved out in our guide to percentage leases and what counts as gross sales.
Whatever the structure, build the full number before you compare spaces:
- Base rent, and every scheduled increase across the whole term. A 3% annual bump compounds into real money by year five.
- CAM charges, common area maintenance. Ask what’s included, whether there’s a cap, and what last year’s actual figure was rather than the estimate.
- Property taxes and insurance, if the structure passes them to you.
- Utilities, and whether the space is separately metered. Shared meters are a recurring fight.
- Percentage rent, if any, plus the breakpoint that triggers it.
For scale: a survey of 496 restaurants by RestaurantOwner.com put median monthly rent at $5,000, reported by WebstaurantStore. But the range across US food space is enormous, so use comps from your own market.
Can you get goods in and out of the leased space?
This is the section tenants skip and later regret. If your orders leave the building, the lease has to support that physically and legally.
Loading access is governed by its own clause. Looking at how these are typically drafted, Law Insider’s collection of loading dock clauses shows the standard pattern: the clause sets out which tenants may use the dock, the permitted hours, scheduling requirements for deliveries, and rules about not storing materials in the dock or common hallway. Some leases grant dock access at all times at no extra rent. Others ration it.
Then there’s the physical fit. Link Logistics’ primer on warehouse lease terms points out that dock-high loading, roughly 48 inches, suits semi-trailers, while grade-level doors are what you want for vans and smaller delivery vehicles. If you’re loading a cargo van twice a day, a dock built for trailers is the wrong door.
Check all of this before signing:
- Hours of operation. Many leases restrict use of the premises outside set hours, and Lexology’s review of use clauses lists exactly that among common landlord restrictions. A prep kitchen that starts at 4am needs that written in.
- Dock or door access, including whether it’s shared, scheduled, or priority-based.
- Vehicle parking. How many spaces, where, and can a branded van sit there overnight?
- Noise and neighbor terms. Use that brings delivery trucks, early hours, or outdoor queues creates friction with building rules, and landlords write clauses to manage it.
- Waste and grease. Who handles removal, and is there space for it?
Walk the space at the hour you’d actually be loading. A dock that’s clear at 2pm can be blocked solid at 6am.
Commercial lease clauses that decide your downside
| Clause | What to check | What it costs you if you miss it |
|---|---|---|
| Permitted use | Covers wholesale, catering, and delivery, not just retail | You can’t legally run part of your business |
| Personal guaranty | Whether one exists, and for how long | Your house backs the lease, not just the company |
| CAM | What’s included, whether it’s capped, last year’s actual | Uncapped bills you didn’t forecast |
| Assignment / subletting | Allowed, and on what approval standard | You can’t sell or exit the business cleanly |
| Repairs | Who fixes HVAC, hood, grease trap, roof | A five-figure repair lands on you |
| Holdover | The rent multiplier if you stay past the term | Often 150–200% of base rent |
| Renewal option | Exists, and how rent gets set | You lose the location or pay market rate |
Two of these deserve extra attention.
The personal guaranty turns a company obligation into a personal one. Turner Padget’s rundown of provisions tenants should watch advises finding the guaranty form in the lease exhibits and agreeing to its terms before signing, not after. Where you can’t remove it, try to limit it: cap the amount, or let it burn off after a set number of on-time years.
Assignment and subletting is your exit. Turner Padget’s guidance also flags that the ability to assign or sublet can be critical if the business struggles or would benefit from relocating mid-term, and that landlord-approval restrictions can badly limit your ability to find a replacement tenant. “Landlord’s consent, not to be unreasonably withheld” is the wording you want.
Repairs and tenant improvement allowance: who pays for what
Two separate questions, both expensive.
On repairs, get the split written down rather than implied. Food space fails in specific ways: hoods, walk-ins, grease traps, HVAC. A lease that says “tenant maintains the premises” without carving out building systems can leave you replacing a compressor.
On build-out, ask for a tenant improvement allowance. The 2026 ranges collected by The Cauble Group put first-generation white-box retail at roughly $80–$150 per square foot and restaurant space at $80–$180, the premium reflecting grease traps, hoods, and gas lines. Industrial space runs far lower. If the landlord promises improvements, Turner Padget’s guidance is that they should be clearly defined in the lease, with a procedure for you to approve the work and request revisions.
Give yourself enough time to review the lease properly
Leasing takes longer than people expect. TheRestaurantHQ’s leasing guide suggests allowing three to six months to find and secure the right space, stretching to nine or twelve months in competitive markets like New York, Los Angeles, or Chicago.
Use some of that time on the document. Travelers’ guidance for small business tenants is blunt about getting an attorney to review the lease before you sign, and commercial leases carry far fewer statutory tenant protections than residential ones. There are no caps on security deposits and no consumer-protection backstop. The contract is the protection.
Once you know what’s wrong with the lease, the next job is getting it changed. That’s a different skill, and we’ve written it up separately in how to negotiate a commercial lease, including what landlords actually concede on rent, free rent, and build-out money.
Frequently asked questions
Can I negotiate a commercial lease, or is it take-it-or-leave-it?
Nearly everything is negotiable, from rent increases to who handles repairs. Landlords expect a counter, and a space that’s been vacant a while gives you leverage.
Do I need a lawyer to review a commercial lease?
For a multi-year commitment with a personal guaranty attached, yes. Commercial leases have fewer built-in tenant protections than residential ones, so the wording is what protects you.
What’s the single most overlooked clause?
The permitted use clause. It’s short, it reads like boilerplate, and it can rule out a whole revenue line (wholesale accounts, catering, or delivery) without ever saying so directly.
Will my landlord count delivery and online orders toward percentage rent?
Increasingly, yes. Landlords want a share of orders fulfilled from the physical location. It’s negotiable, and it’s worth handling explicitly rather than hoping the definition of gross sales is silent.
Before you sign
Read the use clause, build the real rent number, confirm you can get goods in and out at the hours you need, find the guaranty, and know your exit. Those five checks catch most of what goes wrong.
Then get the lease in front of a lawyer. A few hundred dollars of review against a five-year obligation is the easiest arithmetic in the whole process.
