The lease is the most important document you will sign

A commercial lease is not like a residential tenancy agreement. It is a complex legal document that can bind your business for 3, 5, or even 10 years — with significant financial consequences if things go wrong. Yet most business owners sign commercial leases with surprisingly little scrutiny.

This guide covers the five most important things to understand before signing any commercial lease, whether you are taking your first space or expanding into a new location.

1. Understand the lease type before anything else

The three most common commercial lease structures are NNN, Gross, and Modified Gross — and the difference between them can be tens of thousands of dollars per year.

A Net Net Net lease means you pay base rent plus your share of property taxes, building insurance, and maintenance costs. These outgoings can add 15–25% on top of the face rent. A Gross lease means you pay one all-inclusive amount and the landlord covers everything. A Modified Gross lease is somewhere in between — the split is negotiated.

Before you compare any two properties, make sure you are comparing the right numbers. A $28/sqft NNN space and a $32/sqft Gross space might cost the same or the NNN space might be significantly more expensive once outgoings are added.

2. Negotiate the lease term — It is always negotiable

Landlords will often present a lease as "standard 3 years" or "standard 5 years" as if the term is fixed. It is not. Lease terms are negotiable, and the right term for your business depends entirely on your growth trajectory and risk tolerance.

A fast-growing startup should push for a shorter initial term with options to renew rather than committing to 5 years in a space they might outgrow in 18 months. An established business looking for stability might prefer a longer term to lock in current rental rates before the market tightens further.

Always negotiate at least one option to renew. This gives you the right — but not the obligation — to stay at a pre-agreed rent for another term. Without a renewal option you are at the landlord's mercy when your lease expires.

3. Read the make good clause carefully

A make good clause requires you to return the premises to their original condition at the end of the lease. This sounds reasonable until you realize it might mean ripping out a fitout you spent $200,000 on.

Make good clauses vary enormously. Some require full reinstatement to original condition. Others allow the tenant to leave approved fitout in place. Always negotiate the make good clause before signing and get clarity on exactly what you will be required to remove or repair at lease end.

4. Understand what you can and cannot do with the space

Commercial leases often contain restrictions on how the premises can be used, whether you can sublease, and what alterations you can make. These restrictions can significantly affect your ability to adapt the space as your business evolves.

Before signing, ask the landlord directly: Can I sublease if I need to downsize? Can I make structural alterations? Am I permitted to conduct my specific business activity from this address? Getting clear answers to these questions before signing avoids expensive disputes later.

5. Always get independent legal advice

This point seems obvious but is frequently ignored — especially by small business owners trying to move quickly on a space they love. A commercial lease lawyer will typically charge $500–$1,500 to review a lease and negotiate key clauses. This is an extremely small cost relative to the financial exposure of signing a multi-year lease without proper advice.

A good lawyer will identify onerous clauses, negotiate better terms, and ensure your interests are protected throughout the lease term. Do not skip this step regardless of how straightforward the lease appears.