What is a typical commercial lease term?

February 28, 2019

Most commercial leases are structured over a 3 or 5-year term.  However, there can be advantages and disadvantages to negotiating a term for more, or less, than what’s customary.  A tenant who may be able to commit to a lease term longer than five years may find landlords willing to negotiate things like free rent or a larger tenant improvement allowance.  Tenants who are only willing to commit to a one or two-year lease term may find landlords less motivated to negotiate flexible terms, concessions in rent or willing to make needed alterations to the space.  The market conditions will also play an important role in who (landlord or tenant) may have favorable leverage while negotiating term as part of a proposed occupancy arrangement as existing supply and demand of space may dictate whether or not a landlord feels compelled to entertain leasing arrangements that are accompanied by tenant stipulations.  The owner of the building will also be a key component to term flexibility as each owner will have a different appetite for filling their vacancy alongside some of the aforementioned factors.