Commercial Lease Analyzer

Analyze commercial leases for hidden costs, unfavorable terms, and negotiation leverage using cost breakdown, escalation, clause review, and market benchmarks.

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Commercial Lease Analyzer

Analyze commercial leases (office, retail, industrial, warehouse) for hidden costs, unfavorable terms, and negotiation leverage. Use when reviewing a new lease, renegotiating a renewal, or comparing multiple lease options.

When to Use

Signing a new commercial lease
Lease renewal negotiation
Comparing multiple lease proposals
Auditing existing lease for cost reduction
Subleasing or assignment analysis

What You Need from the User

Lease type: Office, retail, industrial, warehouse, mixed-use
Lease terms: Base rent, term length, renewal options
Cost structure: NNN, modified gross, full-service gross
Square footage: Usable vs rentable (load factor)
Location/market: City, submarket (for comp analysis)

Analysis Framework

1. Cost Breakdown (True Occupancy Cost)

text

Base Rent ($/SF/yr)
+ CAM Charges (Common Area Maintenance)
+ Property Tax Pass-Through
+ Insurance Pass-Through
+ Utility Estimates
+ Parking Costs
+ Janitorial (if not included)
= Total Occupancy Cost ($/SF/yr)
÷ 12 = Monthly Cost
× Term = Total Lease Liability

2. Load Factor Analysis

text

Rentable SF ÷ Usable SF = Load Factor
Industry benchmarks:
- Class A Office: 1.15-1.20 (15-20% common area)
- Class B Office: 1.12-1.18
- Retail: 1.05-1.10
- Industrial: 1.02-1.05

Flag if load factor > benchmark. Every 1% = real money.
Example: 5,000 USF at 1.20 = paying for 6,000 RSF
At $30/SF = $30,000/yr for hallways and lobbies

3. Escalation Modeling

Project total cost over full term including:

Fixed increases: 3% annual is standard. Flag >3.5%
CPI-linked: Model at 2.5%, 4%, 6% scenarios
Market reset: Compare to projected market rents
CAM escalation caps: If uncapped, model 5-8% annual increases

Output a year-by-year cost table showing base rent, estimated CAM, total cost.

4. Critical Clause Review

Red Flags (flag immediately):

Personal guarantee without sunset clause
Demolition clause (landlord can terminate for redevelopment)
Radius restriction >3 miles (retail)
Continuous operation clause without co-tenancy protection
Uncapped CAM with no audit rights
Relocation clause (landlord can move you)
No assignment/sublease rights
Holdover rate >150% of final rent

Yellow Flags (negotiate):

No rent abatement for construction delays
No exclusive use clause (retail)
HVAC maintenance fully on tenant
No cap on controllable operating expenses
Restoration clause requiring original condition
No early termination option after year 3-5
Insurance requirements above standard

Green (Standard/Favorable):

TI allowance ($30-60/SF office, $15-30 retail)
Free rent period (1 month per year of term)
Right of first refusal on adjacent space
Renewal option at fair market value
CAM audit rights
Assignment rights with reasonable consent

5. Negotiation Leverage Points

Based on market conditions, identify:

Tenant's market (vacancy >15%): Push for higher TI, more free rent, lower escalations
Landlord's market (vacancy <8%): Focus on caps, flexibility clauses, termination rights
Balanced (8-15%): Standard negotiations, pick 3-4 priorities

Rank negotiation items by dollar impact over lease term.

6. Comparison Matrix (Multiple Options)

If comparing leases, output a side-by-side table:

Factor	Option A	Option B	Option C
Effective Rent ($/SF)
Total 5-Year Cost
TI Allowance
Free Rent (months)
Escalation Type/Rate
Termination Option
Load Factor
Parking Ratio

7. Financial Impact Summary

Total lease liability (ASC 842 / IFRS 16)
NPV of all lease payments (discount at 6-8%)
Break-even occupancy cost per employee
Cost per revenue dollar (if revenue data provided)

Output Format

text

LEASE ANALYSIS: [Property Address]
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

VERDICT: [FAVORABLE / NEGOTIATE / WALK AWAY]

TRUE COST
Monthly: $XX,XXX
Annual: $XXX,XXX
Full Term: $X,XXX,XXX
Per Employee: $X,XXX/mo (at XX headcount)

RED FLAGS: [count]
[List with dollar impact]

TOP 3 NEGOTIATION PRIORITIES:
1. [Item] — potential savings: $XX,XXX over term
2. [Item] — potential savings: $XX,XXX over term
3. [Item] — potential savings: $XX,XXX over term

YEAR-BY-YEAR PROJECTION:
[Table]

Industry Benchmarks (2025-2026)

Market	Office ($/SF)	Retail ($/SF)	Industrial ($/SF)
NYC	$65-85	$80-200+	$18-25
SF/Bay	$55-75	$45-80	$15-22
LA	$40-55	$35-65	$14-20
Chicago	$28-42	$25-50	$8-12
Dallas	$25-38	$22-40	$6-10
Miami	$42-58	$40-75	$12-16
Atlanta	$25-35	$20-38	$6-9
Denver	$28-40	$22-38	$8-12
Austin	$35-48	$28-45	$10-14
National Avg	$32-45	$25-45	$8-14

TI allowances: $30-60/SF (office), $15-30/SF (retail), $5-15/SF (industrial) Free rent: 1 month per year of term is standard in balanced markets

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