Sample report — illustrative, not a real lease
123 Sample Street, Suite 400 — 5-year office renewal (illustrative)
Bottom line
This lease needs real changes before you sign. Start with the priority below — several terms here are genuinely one-sided.
Risk: No time-of-essence language
12 more negotiation points below, ranked by how much each is worth pushing for.
Grade capped: 1 fatal term present (ASN-001).
Coverage: 94% of 129 applicable criteria?The share of our framework's applicable criteria that this specific lease's text actually let us check — lower coverage usually means the document is silent on more topics, not that more of it was checked and passed.·Negotiation opportunity: High?How winnable this lease is at the table, separate from how good it is on paper — a strict lease with real leverage points (upcoming vacancy, a motivated landlord) can still score well here.
Rent & escalation — the big picture
Net rent?Base rent only — Operating Costs (property taxes, insurance, common-area maintenance) are billed to you separately, on top of this amount.These figures are base rent only — Operating Costs/Additional Rent are separate and come on top (see below).
Starting rent is $24.00/sf/year, stepping up over the 5-year term.
Rent increases 3% each year on top of the step schedule, compounding annually.
Watch for this: the stepped rate schedule and the separate escalation clause stack on top of each other — easy to miss reading the clauses one at a time, but it compounds your real cost faster than either looks alone.
The trade: the 2 months of free rent offset about 3.1% of the scheduled 5-year rent, while the escalations raise Year 5 rent about 15.9% above Year 1. The concession is one-time and lands up front; the escalation compounds and stays for the rest of the term.
These dates are calculated from the notice periods and term lengths the lease states, counting back from each term's expiry — check them against the lease before relying on one.
150% of your final year's rent if you stay past expiry without a signed renewal — about $41.72/sf/year, up from $27.81/sf/year.
150% of the rent payable immediately before expiry, tenancy at sufferance (no fixed term), plus exposure to the landlord's consequential damages.
| Year | Rate /sf/yr | Net annual cost (before free rent) | + Operating Costs (est.) | = All-in (before free rent) | − Free rent | = Net cost |
|---|---|---|---|---|---|---|
| 1 | $24.00 | CA$96,000 | + CA$50,000 | CA$146,000 | − CA$16,000 | CA$130,000 |
| 2 | $24.72 | CA$98,880 | + CA$50,000 | CA$148,880 | — | CA$148,880 |
| 3 | $26.21 | CA$104,840 | + CA$50,000 | CA$154,840 | — | CA$154,840 |
| 4 | $27.00 | CA$107,985 | + CA$50,000 | CA$157,985 | — | CA$157,985 |
| 5 | $27.81 | CA$111,244 | + CA$50,000 | CA$161,244 | — | CA$161,244 |
$12.50/sf/yr (CA$50,000/yr at 4,000 sf) — current estimate, held flat across the term above since landlords re-estimate this annually, not on a fixed schedule the way base rent is.
Tenant pays its proportionate share of Operating Costs, including a management fee capped at 10% of gross rents.
Score by dimension
- 12+ months before expiry — commonly missed
- Time is of the essence — one day late kills the option
- Landlord may terminate during renewal — option is hollow
- Guarantee expires or burns down
- Proportionate abatement during untenantability
- Guarantee ends on permitted assignment
- Landlord discretion or vague 'to be agreed'
- Area 'final and binding'; verification waived
- Escalations set later by landlord or 'to be negotiated'
- How this rent compares to what you've actually seen nearby is the starting point for whether it's fair.
- Rent reads at or below what you've seen for comparable space.
- Rent as a share of revenue tells you how much room this negotiation actually has.
- No mechanism, landlord's determination is final, or the appraiser/decision-maker is unilaterally selected by the landlord alone
- Binding notice with rent set later by landlord-controlled process
- The lease grants a single renewal option (5 further years in total) — after it, you have no contractual right to remain.
- At least one renewal option exists in writing
- No default condition, or material monetary default only
- Single narrow use; change at landlord's sole discretion
- Assignment absolutely prohibited
- Sole and absolute discretion to refuse
- No cap of any kind
- A growing business with no expansion rights will outgrow this space with no built-in path to more of it.
- Materially above market with escalation faster than CPI — a negotiation lever and a relocation consideration
- Whether a sale or restructuring is on the table changes how much assignment terms matter.
- Whether leaving is genuinely on the table changes how much your restoration exposure at exit matters.
- Staying reads as the practical choice on rent alone, so there's less reason to model a relocation in detail.
Negotiation Opportunity is reported here but not blended into the overall grade — it answers "how winnable is this?", not "how good is this lease?"
Fatal terms
Terms severe enough on their own to cap the overall grade, regardless of how everything else scores.
- ASN-001 — May the tenant assign the lease?What counts as fatal here: Assignment absolutely prohibited
Clause interactions
Individual terms that are more dangerous in combination than any one of them looks alone.
- Unchecked cost pass-throughHigh
Operating costs are broadly defined, there's no audit right, and the window to dispute a statement is short. In practice the charges are whatever the landlord says they are, and it's over quickly.
Top negotiation points
Ranked by how much each one is worth pushing for — biggest commercial impact first.
- 1. RiskUsually straightforward
Lease says: Time is of the essence — one day late kills the option
Ask for: No time-of-essence language
- 2. RiskUsually straightforward
Lease says: 48–72 hours, and certifies away claims
Ask for: 10+ business days, factual status only
- 3. Financial FairnessUsually straightforward
Lease says: Uncapped, or a % of total costs so it compounds
Ask for: Capped at market % of net rent or actual cost
▸Show 10 more negotiation points
- 4. RiskUsually straightforward
Lease says: 30–60 day deemed acceptance
Ask for: 12+ months to dispute
- 5. Renewal StrengthStructural — rarely won outright
Lease says: No mechanism, landlord's determination is final, or the appraiser/decision-maker is unilaterally selected by the landlord alone
Ask for: Binding arbitration or third-party appraisal, with the appraiser/arbitrator chosen jointly, by an agreed neutral process, or court-appointed if the parties can't agree
- 6. Financial FairnessStructural — rarely won outright
Lease says: 'Without limitation' catch-all covering all ownership costs
Ask for: Closed, itemized list of includable costs
- 7. RiskStructural — rarely won outright
Lease says: No audit right, or expressly waived
Ask for: Express audit right with access to invoices
- 8. FlexibilityStructural — rarely won outright
Lease says: Assignment absolutely prohibited
Ask for: Assignment permitted with consent
- 9. FlexibilityStructural — rarely won outright
Lease says: Sole and absolute discretion to refuse
Ask for: Consent not to be unreasonably withheld
- 10. RiskStructural — rarely won outright
Lease says: Landlord elects at expiry — exit cost unbudgetable
Ask for: Fixed in writing at approval time
- 11. RiskStructural — rarely won outright
Lease says: Full restoration to base building at tenant's cost
Ask for: Modest, quantifiable scope
- 12. Financial FairnessUsually straightforward
Lease says: Both charged — double-dipping on the same service
Ask for: One clearly defined fee only
- 13. Financial FairnessStructural — rarely won outright
Lease says: Floor at current rent regardless of market
Ask for: No floor — rent can fall if market falls