Commercial Lease Jiu‑Jitsu: How to Turn Your Landlord’s Priorities Into Your Biggest Advantages
Commercial lease negotiations offer far more flexibility than most business owners realize, and thoughtful negotiation can dramatically improve both profitability and stability for landlords and tenants alike.
Triple net vs modified gross
In a triple net lease, tenants pay base rent plus their share of property taxes, property insurance, and common area maintenance as separate “pass-through” costs, which are estimated up front and trued-up annually.
In a modified gross lease, those same operating expenses are largely baked into a higher base rent, so a space listed at 25 plus 5 in triple net can end up similar, on a monthly basis, to a space listed at 30 modified gross.
Tenant improvements and buildout
Many newer or repositioned spaces are delivered as a shell, so tenants should expect to invest in customizing the space and negotiate a tenant improvement (TI) allowance, either as cash reimbursement against receipts or as rental credit.
TI can be structured in different ways—turnkey (landlord manages and pays), tenant-controlled, or landlord-controlled—each balancing control, risk, and workload differently for the business.
Base rent and annual increases
Typical initial lease terms run three to five years (sometimes seven to ten), and commercial leases usually include built-in annual increases, often in the 3–5 percent range in many markets rather than a flat payment over the entire term.
Creative structuring—such as averaging rent over the full term for a flat payment, or front-loading discounts with steeper later increases—can align the landlord’s income needs with the tenant’s early-stage cash-flow realities.
Early access, abatement, and ramp-up
Early access lets tenants enter the space before rent starts, often to complete buildout or set up operations, giving them time to invest in the space without immediately bearing full rent obligations.
Rent abatement (free base rent for one to three months or more) is common on longer terms; tenants may still pay triple net charges during that period, and some landlords prefer to add abated months to the back end of the lease to preserve value.
Maintenance risk and protecting your business
Maintenance obligations are a critical but often overlooked clause; a common compromise is for the tenant to cover repairs up to a fixed dollar amount per incident or per year, with the landlord responsible above that threshold.
In older buildings, pushing 100 percent maintenance (including major systems and structural issues) onto the tenant can be catastrophic, as in cases where termite infestation or aging HVAC systems effectively shift capital replacement risk to the business.
Negotiation strategy and building your team
Negotiating base rent in today’s environment can be challenging, as many landlords hold firm on rate while remaining flexible on other terms like TI, abatement, maintenance caps, and lease length to make the numbers work.
Successful deals start with understanding what matters most to the other side—stability, cash up front, simplicity—and assembling the right team: a commercial broker to structure the economics, a general contractor for buildout, and an attorney to review final lease language.
