<svg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1200 340" role="img" aria-label="What Questions Should I Ask Before Signing Any Commercial Lease? — PULSE Buildouts"><rect width="1200" height="340" fill="#EBE9DE"/><rect width="14" height="340" fill="#C0531F"/><text x="58" y="116" font-family="Arial,Helvetica,sans-serif" font-size="32" font-weight="800" letter-spacing="3" fill="#C0531F">PULSE BUILDOUTS · COMMERCIAL REAL ESTATE</text><text x="56" y="198" font-family="Arial,Helvetica,sans-serif" font-size="60" font-weight="800" fill="#2b2b2b">Save money.

Don&#8217;t get screwed.</text><text x="58" y="258" font-family="Arial,Helvetica,sans-serif" font-size="30" font-weight="600" fill="#6b5b4d">Leases, TI, NNN &amp; buildouts — negotiated in your favor</text><g transform="translate(1010,86)" fill="none" stroke="#C0531F" stroke-width="9" stroke-linejoin="round"><rect x="20" y="40" width="150" height="130"/><line x1="20" y1="40" x2="95" y2="6"/><line x1="170" y1="40" x2="95" y2="6"/><rect x="50" y="80" width="36" height="36"/><rect x="104" y="80" width="36" height="36"/><rect x="74" y="128" width="42" height="42"/></g></svg>

What Questions Should I Ask Before Signing Any Commercial Lease?

Direct Answer

Before you sign anything, you need answers to a tight set of questions that determine whether the deal saves you money or quietly bankrupts you — and the single biggest one is: "Is this gross, modified gross, or triple-net (NNN), and what's the fully-loaded cost per square foot including all pass-throughs?" A $24 per square foot NNN quote with $10 per square foot in operating expenses is a $34 deal, and tenants get crushed because they compare base rents instead of all-in costs.

The rest of the must-ask list: What's the rentable-vs-usable square footage and the load factor? (a 15–20% load factor means you pay for 20% of space you can't use); What's the annual escalation? (cap fixed bumps at 2.5–3.5%, refuse uncapped CPI); What's the TI allowance and who controls the buildout? ($30–$100+ per square foot is normal); Who pays for roof, HVAC, and structural replacement? (those are landlord capital, not your repair line); What concessions are on the table? (free rent, roughly one month per year of term); What are my renewal, expansion, and termination rights?; and What personal guaranty are you asking for, and can it burn off over time? The money move is to never sign a landlord's first draft — every commercial lease is negotiable, the first draft is written entirely for the landlord, and the questions you ask before signing are worth more than anything you can fix after.

The Cost Questions That Decide Everything

Most lease screw-jobs hide in the cost structure, so press on these first:

• "Gross, modified gross, or triple-net?" In a gross lease the landlord covers operating expenses; in NNN you pay base rent *plus* your pro-rata share of taxes, insurance, and CAM. Get the fully-loaded number.
• "What's the actual operating-expense load?" Demand the current CAM, tax, and insurance figures per square foot and the trend over the last three years.
• "What's the load factor?" Rentable square footage includes common areas; usable is what you occupy. A 15–20% load factor means you pay for space you'll never use.
• "What are the escalations?" Fixed bumps of 2.5–3.5% are fine; uncapped CPI is a blank check.
• "Is there a CAM cap?" Negotiate a cap on controllable operating-expense increases (often 3–5% annually) so you're not exposed to runaway costs.
• "What concessions are available?" Free rent, TI allowance, moving allowance — all standard, all negotiable.

The Buildout And Capital Questions

The buildout and the building's bones decide how much cash you burn and what surprises hit you later:

• "What's the TI allowance and how is it paid?" Confirm the dollar amount ($30–$100+ per square foot), whether it's paid as reimbursement or directly, and the documentation required to draw it.
• "Who controls the construction?" Landlord-managed buildouts often carry a 3–5% supervision fee and markups. Tenant-managed gives you cost control.
• "What's the base-building condition on delivery?" Get a written definition so shell, roof, and core systems stay on the landlord, not your TI budget.
• "Who pays for roof, HVAC, and structural replacement?" These are landlord capital expenses — replacing a rooftop HVAC unit runs $15,000–$50,000 and a roof runs $5–$15 per square foot. They must not land on your repair line.
• "When does rent commence?" Tie it to certificate of occupancy plus a fixture period, not lease signing.
• "What's the restoration obligation at term end?" A clause forcing you to remove improvements can cost six figures — negotiate it out or cap it.

The Flexibility And Exit Questions

A lease is a multi-year commitment, so your ability to grow, shrink, or leave is worth real money:

• "Do I have a renewal option, and at what rate?" Lock a renewal at a pre-set rate or fair-market value with a floor/ceiling, not the landlord's discretion.
• "Can I expand or get a right of first refusal on adjacent space if I grow?"
• "What are my sublease and assignment rights?" Avoid clauses requiring landlord consent that can be withheld unreasonably or that let the landlord recapture the space.
• "Is there a termination option?" A negotiated early-out (with a fee) caps your downside if the business changes.
• "What personal guaranty is required, and does it burn off?" Push for a limited or burn-off guaranty that reduces or expires after 12–36 months of on-time payment.
• "Is there an SNDA and quiet-enjoyment clause?" Protects you if the landlord's lender forecloses.

How Not To Get Screwed By The Landlord

The first draft is the landlord's wish list. The defining mistakes tenants make:

• Comparing base rents instead of net effective rent. Always compute total cost across the term, net of concessions, divided by term and square footage.
• Skipping the broker. A tenant-rep broker is typically paid by the landlord and knows the market comps, concession norms, and which clauses to strike.
• Skipping the real-estate attorney. A few thousand dollars in legal review routinely saves six figures over a lease term.
• Signing an uncapped guaranty. Unlimited personal liability on a multi-year lease can follow you long after the business fails.
• Ignoring the operating-expense exclusions. Demand a written list of what's *excluded* from CAM — capital items, landlord financing costs, and reserves should never pass through.
• Trusting verbal promises. If it isn't in the executed lease, it doesn't exist.

A Quick Pre-Signing Checklist

1. Get the fully-loaded cost — base plus all pass-throughs.
2. Confirm the load factor and the rentable-vs-usable gap.
3. Cap escalations at 2.5–3.5% and cap controllable CAM.
4. Nail down the TI allowance and who controls the buildout.
5. Assign roof, HVAC, and structural replacement to the landlord.
6. Secure renewal, expansion, sublease, and termination rights.
7. Limit or burn off any personal guaranty.
8. Hire a tenant-rep broker and an attorney before signing.

FAQ

What's the difference between a gross and triple-net (NNN) lease? In a gross lease the landlord pays operating expenses out of the base rent; in NNN you pay base rent *plus* your pro-rata share of property taxes, insurance, and common area maintenance. That's why a $24 per square foot NNN quote with $10 in pass-throughs is really a $34 deal.

Always compare the fully-loaded cost, never base rents alone.

What is a load factor and why does it cost me money? The load factor is the gap between rentable square footage (which includes a share of lobbies, hallways, and common areas) and usable square footage (what you actually occupy). A 15–20% load factor means you pay rent on roughly 20% of space you can't use.

Always ask for both numbers and factor the load into your cost comparison.

Should I sign a personal guaranty on a commercial lease? Avoid an unlimited one. If the landlord requires a guaranty, negotiate a limited or burn-off guaranty that caps your exposure and reduces or expires after 12–36 months of on-time payments, or limits liability to a fixed number of months' rent.

Unlimited personal liability can follow you for years after a business fails.

How much can I negotiate on a commercial lease? Almost everything is negotiable, and the first draft is written entirely for the landlord. Base rent, escalations, free rent (roughly one month per year of term), TI allowance, CAM caps, renewal and termination rights, and the personal guaranty all move with the right leverage.

A tenant-rep broker and an attorney typically pay for themselves many times over.

What should I never let pass through in CAM? Capital expenditures (roof, structural, HVAC replacement), the landlord's financing and mortgage costs, leasing commissions, reserves, and costs to fix the landlord's own defects or violations should all be excluded. Demand a written list of CAM exclusions and a cap on controllable operating-expense increases of 3–5% annually.

Sources

• CBRE — Office and industrial lease economics and net-effective-rent reports.
• JLL — Lease structuring, tenant improvement, and occupier cost research.
• Cushman & Wakefield — Occupier lease negotiation and CAM advisory.
• NAIOP (Commercial Real Estate Development Association) — Lease structure and concession research.
• BOMA International — Operating expense, CAM, and load-factor standards.
• IREM (Institute of Real Estate Management) — Lease administration and expense pass-through guidance.
• Tenant-rep brokerage practice guides on commercial lease negotiation.