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A commercial office lease due-diligence checklist helps you find cost, construction, use, and exit issues before they become contractual obligations. Before signing, compare the lease with the negotiated deal, calculate the full occupancy cost, confirm that the space can legally and practically support your business, and put delivery and build-out responsibilities in writing. Then have qualified local advisers review the actual documents: lease rules, approvals, remedies, and market practices vary by location and transaction.
What should I check before signing an office lease?
Work through the lease in a deliberate order: first reconcile the documents and parties, then model the full cost, verify the area and intended use, resolve delivery and construction, allocate ongoing responsibilities, and finally review flexibility and exit rights. Keep a written question list for your lawyer, tenant representative, architect or engineer, insurance adviser, and—where necessary—local permitting or zoning authorities.
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A lease is not just a rent figure. A space with a lower quoted base rent may cost more once pass-through expenses, a larger rentable-area calculation, tenant-funded construction, or service obligations are included. A business that cannot obtain the approvals it needs, or cannot open on time because delivery terms are unclear, may face costs that are not visible in the asking rent.
1. Do the lease documents match the deal you negotiated?
Identify the tenant’s exact legal entity and any guarantor, then compare the entire lease package with the signed letter of intent (LOI) or term sheet. Check the lease, rider, exhibits, work letter, building rules, plans, and every attachment—not just the main rent clause.
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- Confirm the parties. Verify the tenant’s legal name, formation jurisdiction if relevant, notice address, and the identity and scope of any guarantor. Ask counsel whether the proposed guaranty matches the business deal and who will be bound.
- Reconcile every material term. Compare premises, area, term, rent, escalations, deposit, free-rent period, renewal or expansion rights, landlord work, improvement allowance, permitted use, and rent commencement against the negotiated document.
- Read incorporated materials. The building’s rules, operating standards, plans, and work letter may create obligations or narrow rights. Confirm that referenced documents are included, dated, and consistent with the lease.
- Put promises in the signed documents. Do not assume that a broker’s email, tour conversation, marketing sheet, or landlord assurance changes the lease. Have counsel incorporate important promises and define how they will be measured or enforced.
The New York City Department of Small Business Services describes an LOI as generally not a contract and advises tenants to consult a broker and lawyer before signing one because important terms can become difficult to renegotiate. Its Commercial Lease Guide also says not to pay the landlord or begin alterations before the lease is signed. That is city-specific guidance, not a universal legal rule; confirm local requirements and your transaction’s terms.
2. What is the full cost of occupying the office?
Ask for a written estimate of total occupancy cost, not just the first year’s base rent. Separate fixed rent from additional rent and identify the definition, calculation method, billing timing, supporting records, and any review rights for each pass-through.
- Base rent and increases: Record the starting amount, any free-rent period, scheduled increases, and the exact dates or formulas that change the amount due.
- Operating expenses and common-area maintenance (CAM): Find out which building expenses can be passed through, how the tenant’s share is calculated, what costs are excluded, and how the landlord treats vacant space or changes in occupancy.
- Property taxes: Determine whether the tenant pays a share of increases over a base year or another defined amount, and ask how assessments, tax appeals, credits, and reassessments are handled.
- Utilities and services: Clarify whether electricity, heating, cooling, water, internet, janitorial work, security, or after-hours service are included, separately metered, billed by the landlord, or arranged by the tenant.
- Other charges and cash requirements: Check insurance-related charges, administrative fees, deposits, letters of credit, late fees, building fees, and any one-time costs. Confirm when each is due and the conditions for its return.
- Reconciliation and audit: Ask when annual statements arrive, when a balance is payable, how long the tenant has to object, what records can be reviewed, and who pays review costs.
Request recent operating-expense and tax statements or reconciliations when available, along with the landlord’s estimate for the period you are evaluating. Ask whether the estimate assumes a particular occupancy level. The ABA authors Patrice Stavile and Jennifer J. Bruton discuss gross-ups and expense exclusions in their 2024 analysis of commercial office lease drafting. They describe a 95% gross-up as typical in the context they discuss and cite 3% to 5% of gross rents as customary caps for certain management fees. Those are the authors’ descriptions of market practice, not universal benchmarks or guaranteed negotiating outcomes. Have counsel examine the exact definitions, caps, and math in your lease.
How do usable and rentable square feet affect rent?
Usable area generally describes the space the tenant controls; rentable area adds the tenant’s allocated share of common areas. Because rent may be charged on rentable area, ask for both figures, the measurement standard, the calculation or load factor, the included common areas, and any right to remeasure. If the square footage affects a substantial part of the deal, ask an architect or other qualified professional to check the plan and measurement basis.
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The NYC guide illustrates the arithmetic with a hypothetical 1,000-square-foot usable office, a 10% share of 1,000 square feet of common space, and rent of $50 per square foot: the result is 1,100 rentable square feet and $55,000 in annual base rent. This is the guide’s worked example—not a current market quote or a recommendation about what a space should cost.
3. Can my business legally and practically use the space?
Confirm that the permitted-use clause covers what your company will actually do, and independently verify approvals that apply to the property and use. A landlord’s description of a space is not a substitute for checking the lease language, building records, and relevant local requirements.
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- Describe real operations: Include customer or patient visits, employee count, equipment, storage, deliveries, hours, noise, and any specialized services. Ask counsel to make the permitted-use language broad enough for the intended business without relying on assumptions.
- Verify approvals: Check zoning, occupancy approvals, licenses, permits, and applicable building requirements with the relevant local authorities or qualified advisers. Ask what approvals the tenant must obtain and what the landlord must provide or maintain.
- Check physical suitability: Have the architect or engineer assess layout, circulation, accessibility needs, electrical and HVAC capacity, plumbing, ventilation, data infrastructure, and other systems your operation requires. Identify upgrades, cost responsibility, and schedule before agreeing to the space.
- Review access and visibility: Confirm entrances, elevator access, loading and deliveries, parking, signage, security arrangements, and any restrictions on operating hours or visitor access.
Do not treat general building suitability as proof that your particular use is allowed. The NYC guide cautions tenants not to assume the landlord knows every permitted use or restriction. Its recommendations are specific to a New York City guide; zoning, permitting, accessibility, and occupancy requirements depend on the property’s jurisdiction and circumstances.
4. What must be settled about delivery and construction?
Define what the landlord must deliver, what work remains, who performs and pays for each item, and what happens if the space is late or deficient. This is especially important when opening depends on construction, inspections, specialized systems, or a sequence of approvals.
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- Specify delivery condition: Describe the required condition in measurable terms, including agreed landlord work, existing conditions, systems, and any items that must be repaired, completed, or removed. Attach plans or a detailed work scope where appropriate.
- Separate landlord and tenant work: List each party’s work, required contractors or approvals, responsibility for plans and permits, review deadlines, site access, construction coordination, and responsibility for overruns or changes.
- Make the allowance usable: State the improvement allowance amount and eligible costs. Clarify submission requirements, supporting invoices, payment timing, retainage if any, deadlines, and what happens to an unused balance.
- Agree on a schedule and dependencies: Document expected milestones, required landlord approvals, access for surveys or construction, and any conditions that must be satisfied before work can proceed. Confirm who handles inspections and closeout documentation.
- Align possession, commencement, and rent start: Define each trigger separately and state what evidence establishes that it occurred. If rent is to begin only after a delivery condition or specified work is completed, express that clearly rather than leaving it to an informal understanding.
- Negotiate delay and deficiency protections: Ask counsel what remedies or termination rights are available if delivery is late, incomplete, or unusable for the agreed purpose, and whether the lease gives effective relief for service interruptions or construction delays.
The ABA analysis and the Contra Costa County Bar Association’s commercial lease review checklist both underscore the importance of delivery, improvements, and commencement terms. Whether a proposed remedy is available or appropriate depends on the lease and local law. Do not assume a standard form automatically gives the tenant the protection it needs.
5. Who is responsible for operations, repairs, and risk?
Read the operating provisions as a cost-and-continuity plan: identify who must maintain each item, what service level is promised, and what happens when an obligation is not met. General phrases such as “building services” may not answer the operational questions that matter to your business.
- Maintenance and repairs: Allocate responsibility for the premises, structure, windows, doors, plumbing, electrical, HVAC, and other building systems. Check whether tenant responsibility changes if a system serves multiple occupants or fails through no fault of the tenant.
- Services and capacity: Confirm service hours, after-hours procedures and charges, temperature control, electrical capacity, elevator availability, water, janitorial service, and other needs. State required capacity or service levels where they are important to operations.
- Access and building operations: Review entry rights, security, construction or maintenance access, interruptions, building rules, signage, deliveries, and parking. Identify notice requirements and any limits that could affect normal business.
- Compliance: Determine which party handles compliance for the building, common areas, and tenant-specific work or operations. Have local advisers review applicable requirements rather than assuming a lease allocation changes what public authorities require.
- Insurance and indemnity: Have an insurance adviser compare required coverage, limits, additional-insured language, and proof requirements with policies actually available to the business. Ask counsel to review indemnity, claims, and responsibility for damage or injury.
- Casualty and interruption: Review rent abatement, repair duties, access during restoration, deadlines, termination options, and what happens if only part of the premises or a key service is unavailable.
The practical question is not only who is responsible on paper, but whether the lease describes a workable response, timeline, and remedy. In particular, ask counsel how the language addresses late or deficient delivery and interruptions. The ABA authors identify these as areas where a tenant may need explicit protections; that does not establish that every landlord form is unenforceable or that any particular clause will be accepted.
6. Can the business adapt or exit if circumstances change?
Review flexibility provisions before signing, while changes are still negotiable. The right to grow, transfer the business, end the lease early, or recover security can affect the value of a long-term commitment.
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- Renewal and expansion: Check option deadlines, notice method, rent-setting formula, space availability, and any conditions for exercising. For expansion rights, define the area, timing, priority, and price mechanism.
- Assignment and subletting: Identify the consent standard, response deadline, information the landlord may request, fees, and whether the tenant remains liable after a transfer. Review permitted affiliate, ownership, or business-reorganization transfers separately.
- Early termination: Determine whether any break right exists, what notice and payment are required, and what conditions must be met. Do not treat a planned business sale, relocation, or contraction as an exit right unless the documents say so.
- Defaults and cure: Check notice requirements, cure periods, treatment of recurring defaults, and the landlord’s remedies. Confirm that the notice addresses in the lease are correct and that the business can meet any response deadlines.
- Guaranty and security: Understand the guaranty’s duration, covered obligations, release conditions, and whether it continues after renewal, amendment, or transfer. Review deposit or letter-of-credit amount, replenishment, draw, and return provisions.
- Holdover and surrender: Review the consequences of remaining after expiration, the condition in which the premises must be returned, which alterations must be removed, and how disputes about damage or restoration are handled.
The ABA analysis and the PLI Commercial Leases Overview treat transfers, guaranties, default, and surrender as important negotiated topics. Their general discussion is not a substitute for local legal advice on your lease.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How should I compare two office spaces?
Compare the same assumptions for each property. A headline rent comparison can mislead if the spaces use different area calculations, expense structures, delivery conditions, or build-out responsibilities.
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| Compare | Questions to answer for each space |
|---|---|
| Total cost | What are base rent, increases, pass-throughs, utilities, fees, deposits, and estimated occupancy costs over the same period? |
| Area and measurement | What are usable and rentable area, the measurement method, load factor, and remeasurement rights? |
| Delivery and build-out | What condition is promised, who performs each item, what allowance applies, and what schedule or delay protection is documented? |
| Use and suitability | Does the permitted use fit actual operations, and can local approvals and technical requirements be met? |
| Operations and risk | Who pays for repairs, services, utilities, insurance, compliance, and restoration, and what happens if service is interrupted? |
| Flexibility and exit | What renewal, transfer, termination, guaranty, default, holdover, and surrender terms apply? |
For each unresolved item, record the document or confirmation needed, the responsible adviser, the decision deadline, and the financial or operational consequence if it remains unresolved. That turns a tour comparison into a decision record your team can use during negotiation.
What should I send to my advisers before signing?
Give each adviser the full set of documents early enough to review them before deadlines. A useful diligence file includes:
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- The latest lease draft, all riders and exhibits, building rules, work letter, plans, and any amendments or side letters.
- The signed LOI or term sheet and written record of agreed business points, including emails or proposals that need to be reflected in the lease.
- Legal-entity and guarantor information, plus a list of signatories and internal approval requirements.
- Rent, expense, tax, utility, and deposit estimates; available reconciliations; and the landlord’s calculation of tenant share and rentable area.
- Plans, condition reports, landlord-work scope, construction schedule, allowance terms, and known system-capacity requirements.
- A plain-language description of the business’s intended use, staffing, visitors, equipment, storage, hours, deliveries, and special requirements.
- A list of open questions by adviser: legal terms for counsel, area and systems for the architect or engineer, business representation and comparables for the tenant representative, coverage obligations for the insurance adviser, and local approvals for the appropriate authorities or specialists.
Keep the final signed lease package and the approved plans together. If a business term changes during negotiation, check whether the change also affects another document—for example, rent commencement, construction access, insurance, or the guaranty.
Where does this checklist stop?
This is a U.S.-oriented practical checklist, not a legal opinion or a substitute for reviewing the actual lease. The NYC Department of Small Business Services guide is useful for its local tenant guidance, while the ABA, county bar, and PLI materials provide broader issue lists and practitioner analysis. None makes a single clause or market practice universal. Ask a lawyer familiar with the property’s jurisdiction to advise on legal effect, enforceability, remedies, and negotiation; use qualified building and insurance advisers for technical and coverage questions.
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Frequently Asked Questions
Is a letter of intent binding for an office lease?
Often an LOI is intended to summarize proposed business terms rather than serve as the final lease, but the effect depends on its wording and applicable law. Ask counsel to review it before signing, especially if it contains confidentiality, exclusivity, expense, or other provisions that may be intended to bind the parties.
What does a lease load factor mean?
It is a way of expressing the difference between usable area and rentable area, reflecting the common-area share included in the rentable figure. Ask the landlord to show the calculation and measurement basis; the label alone does not tell you which common areas were counted.
When does rent start if the landlord delivers the office late?
There is no safe assumption that rent automatically waits until the space is ready. The lease should define the rent-start trigger, what counts as delivery, treatment of unfinished work, and any remedy or termination right for delay; have local counsel assess the proposed language.
Should I have an architect review an office before signing?
Consider one when layout, measurements, accessibility, system capacity, or construction scope could affect whether the space works or what it will cost. An architect or engineer can identify technical questions for the lease and work letter, but legal approvals and contractual protections still need the appropriate local review.
