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Commercial Leasing
A commercial lease is one of the most significant contracts a business will sign. Unlike residential leases, commercial leases in New York are heavily negotiated documents with little statutory protection for tenants. The landlord’s form lease is almost always drafted in the landlord’s favor. Rent escalation clauses, operating expense pass-throughs, permitted use restrictions, personal guarantee obligations, and assignment and subletting rights all require careful review and negotiation before a tenant signs.
Parandian Law represents landlords and tenants in commercial lease negotiations for office, retail, and industrial space across Westchester County, New York City, and the surrounding region. We review lease terms, negotiate modifications that reflect our client’s actual business needs and risk tolerance, and advise on the long-term implications of the obligations being assumed.
Commercial leases typically run for five to ten years or longer. The financial commitments involved, including base rent, escalations, operating expenses, and personal guarantee exposure, can be substantial. Getting the lease terms right at the outset is far less expensive than trying to renegotiate or exit a lease mid-term.
Commercial Lease Attorney New York · Office Lease Attorney Westchester · Retail Lease Attorney New York · Commercial Tenant Attorney · Landlord Attorney New York · Lease Negotiation Attorney · Industrial Lease Attorney · Commercial Real Estate Attorney Westchester
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New York commercial lease framework
Commercial leasing — the essentials
New York commercial leases are governed almost entirely by contract rather than statute. There is no implied warranty of habitability, no rent stabilization, and no mandatory renewal right for commercial tenants. The lease is the entire agreement between the parties, and its terms control what happens in virtually every situation that arises during the tenancy. A tenant who signs a lease without understanding its terms assumes all of the obligations it contains, including personal guarantee provisions, as-is condition clauses, operating expense pass-throughs, and restoration obligations at the end of the term. We review every provision before our client signs and explain the practical implications of the terms being agreed to.
The letter of intent or term sheet that precedes the formal lease negotiation establishes the key economic terms of the deal, including base rent, lease term, renewal options, tenant improvement allowance, and the permitted use of the space. While the letter of intent is typically non-binding, the terms agreed there anchor the lease negotiation that follows. Landlords will resist significant departures from the letter of intent during lease drafting. Getting the right terms in the letter of intent before the formal lease process begins is therefore one of the most important steps in a commercial lease transaction. We advise tenants and landlords on letter of intent terms before they are committed.
Key FACTS
Statutory tenant protections:
Minimal for commercial tenants in NY
Lease term:
Typically 3 to 10 years for commercial space
Common, negotiable in scope and duration
Often passed through to tenant
Rent escalation:
Fixed steps or CPI-based, negotiable
Tenant improvement allowance:
Negotiable, landlord-funded buildout
Subletting and assignment:
Restricted, requires landlord consent
Restoration obligation:
Tenant may be required to restore at end of term
What we handle
Commercial leasing services
Landlord and tenant representation for commercial lease negotiations across Westchester County and the greater New York area.
Tenant lease review and negotiation
Review and negotiation of commercial leases on behalf of tenants, including office, retail, and industrial space. We identify one-sided provisions, negotiate modifications that reflect the tenant’s actual business needs and risk tolerance, and advise on the long-term implications of the obligations being assumed before the lease is signed.
Landlord lease drafting and negotiation
Drafting and negotiation of commercial leases on behalf of landlords, including base rent, escalation provisions, operating expense pass-throughs, permitted use restrictions, assignment and subletting controls, and default and remedy provisions. We draft leases that protect the landlord’s economic interests and reduce the risk of tenant disputes during the term.
Letter of intent review
Review and negotiation of commercial lease letters of intent before the formal lease process begins. The terms agreed in the letter of intent anchor the lease negotiation that follows. We advise tenants and landlords on letter of intent terms including base rent, lease term, renewal options, tenant improvement allowance, and permitted use before they are committed to those terms.
Lease amendment and assignment
Drafting and negotiation of commercial lease amendments, extensions, expansions, and assignments. We represent both landlords and tenants in mid-term lease modifications and advise on the legal and practical implications of proposed changes to existing lease obligations, including the effect on personal guarantees and subletting rights.
How it works
Our commercial leasing process
01
Letter of intent review
We review or draft the letter of intent before our client commits to key economic terms. The letter of intent sets the framework for the lease negotiation. Getting base rent, lease term, renewal options, tenant improvement allowance, and permitted use right at this stage prevents costly concessions during the formal lease process.
02
Lease review and markup
We review the full lease and prepare a detailed markup identifying provisions that require negotiation. For tenants, this includes personal guarantee scope, operating expense definitions and caps, subletting and assignment rights, restoration obligations, and default cure periods. For landlords, this includes use restrictions, assignment controls, and default and remedy provisions.
03
Negotiation and finalization
We negotiate directly with opposing counsel or the landlord’s representative to reach agreement on the marked provisions. We keep our client informed of the negotiation progress and advise on which concessions are worth pressing and which are standard in the local market. We finalize the lease and confirm our client understands all material obligations before signing.
04
Execution and follow-up
We coordinate the execution of the lease and any side letters or exhibits. We advise on post-signing obligations such as delivery of security deposits, insurance certificates, and personal guarantee documents. We are also available to advise on lease interpretation questions and disputes that arise during the term.
Common questions
Commercial leasing FAQ
What is the difference between buying a co-op and buying a condo?
Yes. Commercial leases in New York are complex, heavily negotiated documents with almost no statutory protection for tenants. The landlord’s form lease is drafted entirely in the landlord’s favor and contains provisions that can expose a tenant to significant financial liability, including personal guarantees that survive the lease term, operating expense pass-throughs that are difficult to predict, and restoration obligations that can cost tens of thousands of dollars at the end of the term. An attorney review typically identifies provisions that can be negotiated and explains the ones that cannot, so the tenant makes an informed decision before signing a multi-year commitment.
What is an operating expense pass-through and how does it affect my rent?
An operating expense pass-through is a lease provision that requires the tenant to pay a share of the landlord’s costs of operating the building in addition to base rent. These costs typically include real estate taxes, insurance, maintenance, utilities for common areas, and management fees. In a gross lease, the landlord pays all operating expenses and the base rent covers them. In a net lease, the tenant pays some or all operating expenses separately. The distinction matters significantly over the life of a lease, particularly as real estate taxes and other costs increase. We review the operating expense definitions and any caps or exclusions in every commercial lease and advise tenants on the realistic cost implications before they sign.
What should I know about personal guarantees in a commercial lease?
A personal guarantee in a commercial lease makes the individual signing the guarantee personally liable for the tenant’s obligations under the lease, including unpaid rent and damages if the tenant defaults or vacates before the end of the term. In New York, landlords routinely require personal guarantees from the principals of small and mid-size business tenants. The scope and duration of the guarantee are negotiable. A good faith negotiation can sometimes limit the guarantee to a defined dollar amount, a defined period of time, or a burndown structure that reduces the guaranteed amount over time. We review personal guarantee provisions in every commercial lease and advise clients on the realistic exposure and negotiating options before they sign.
What happens if I need to exit a commercial lease early?
Exiting a commercial lease before the end of the term in New York typically requires either negotiating a lease termination with the landlord or exercising a termination option if one was included in the lease. Without a negotiated exit or a contractual termination right, a tenant who vacates before the end of the term remains liable for all remaining rent obligations. New York imposes a duty to mitigate on landlords, meaning the landlord must make reasonable efforts to re-let the space before recovering damages from the departing tenant. However, the landlord’s mitigation obligation does not eliminate the tenant’s liability for the period the space remains vacant. Early exit provisions are negotiable at the time of lease signing and are far easier to obtain then than after a problem arises.
Related services
Often considered alongside Commercial Leasing
Need a commercial lease reviewed or negotiated?
Commercial leases in New York are long-term commitments with significant financial consequences. Speak with an attorney before you sign a letter of intent or lease agreement.
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