Commercial Office Lease Agreement

A commercial office lease agreement is a contract between a landlord and a tenant that outlines the terms and conditions of a property rented for office space. The legal document caters to the unique needs of the business, such as zoning requirements, signage allowance, and utilities.

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Last updated January 2nd, 2025

A commercial office lease agreement is a contract between a landlord and a tenant that outlines the terms and conditions of a property rented for office space. The legal document caters to the unique needs of the business, such as zoning requirements, signage allowance, and utilities.

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Office Space Stats (2024)

  • AVG $/SF: $32.85 SF[1]
  • AVG Term for Class A/Prime Office Buildings: 107 months[2]
  • AVG Term for Non-Prime Office Buildings: 86 months[3]
  • Vacancy Rate: 19.4%[4]

Key Things to Know About Commercial Office Lease Agreements

  • Lease Term: Office lease terms often last 3-10 years, offering stability for landlord and tenant.
  • Tenant Improvements (TIs): Option to include an allowance for space customization. Tenants and landlords can negotiate who oversees construction and whether unused funds can be repurposed.
  • Common Area Maintenance (CAM): Tenants often share the costs of maintaining common areas, such as hallways, parking lots, and lobbies. How these costs are calculated should be clearly defined.
  • Parking: Ensure provisions for parking match employee needs.
  • Liability and Insurance: Tenants are often required to carry liability insurance and sometimes additional coverage for property and business operations.

The Three Different Office Categories

  • Class A Office Space: Also called Prime, these are the highest-quality office buildings in a market in a prime location with full-service amenities. Ideal for corporations, financial institutions and business prioritizing brand image and client experience.
  • Class B Office Spaces: Mid-tier office in an older but well-maintained building offering fewer amenities. Best for businesses seeking a balance between quality and cost.
  • Class C Office Space: lower-tier buildings that may require a significant upgrades or repairs. Perfect for start-ups, non-profits, or businesses prioritizing cost savings over location and amenities.

Top Industries Leasing Prime Office Buildings

Analysis of office space of 10,000 SF or more, from 2021-2024.[5]

  • Legal: 34%
  • Tech: 16%
  • Finance: 16%

Top Cities with Highest Rental Rates

The average monthly asking rate for full-service office space as of November 2024.[6]

    1. Manhattan: $68.87 SF
    2. San Fransisco: $68.81
    3. Boston: $53.35 SF
    4. Miami: $52.84 SF

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