The commercial deal,
decoded end to end.

Plan on three to nine months from first tour to open doors on a space that needs work. Second-generation space you can use as-is can move in six weeks. The single most common planning mistake is signing a lease with a rent start date that assumes permits take two weeks.

Base rentThe headline number

The rent for the space itself, almost always quoted in dollars per square foot per year in Colorado. Divide by 12 to get a monthly rate. Some smaller retail and flex listings quote monthly instead — always confirm which.

NNN / operating expensesThe second number

Your share of property taxes, building insurance, and common area maintenance, quoted the same way — dollars per square foot per year. It is billed monthly as an estimate and reconciled once a year against actual costs. WatchReconciliation means a true-up bill can arrive in Q1 for the prior year. Ask for three years of actual expense history before you sign.

EscalationsHow it grows

Base rent increases on a schedule — commonly a fixed 3% per year, a stepped dollar amount, or a CPI-linked bump. NNN charges rise on their own as taxes and insurance rise, whether or not base rent escalates.

Free rent / abatementThe offset

Months of rent waived, usually during buildout or at the front of the term. Ask whether abatement covers NNN too — often it covers base rent only, and you still owe operating expenses from day one.

Percentage rentRetail only

Common in malls and anchored centers: a percentage of gross sales above a stated breakpoint, paid on top of base rent. Less common in standalone or strip retail.

Effective rentWhat you actually pay

Total rent across the whole term, minus free rent and TI value, divided by the term. This is the number to compare two offers with — not the headline rate.

Modified gross is the dangerous one. There is no standard definition. Two modified gross leases in the same building can allocate costs completely differently. Read the actual expense language; never assume.

Load factors typically run 10–18% in multi-tenant office and enclosed retail, and near zero in freestanding buildings and most industrial. Always ask for both numbers, and ask how the building measures — BOMA standards differ from one another, and a re-measurement mid-term can quietly raise your rent.

What condition are you getting the space in?

How the buildout gets paid for

Non-binding matters. Signing an LOI does not commit you to the space. It commits both sides to negotiating from one shared set of numbers — which is the only way a deal moves forward instead of circling.

Personal guarantyYour liability

You personally guarantee the lease, so the entity shield doesn't protect your house. Landlords ask for it from almost every small business. NegotiateA burn-down (guaranty shrinks each year of on-time payment) or a good guy clause (liability ends when you surrender the space clean, with notice).

Renewal optionYour future

The right, not the obligation, to extend. If you fund a buildout on a short term without one, you have handed the landlord all the leverage at renewal — they know moving costs you more than paying. NegotiateRate defined as a formula or a cap, not “then-prevailing market rate” alone.

Exclusive useRetail protection

Landlord agrees not to lease other space in the center to a direct competitor. Worth real money in a multi-tenant retail property.

Co-tenancyRetail protection

Rent reduction or exit right if the anchor tenant or a stated occupancy percentage goes away. You signed up for the center's traffic, not just the box.

Assignment & subleaseYour exit

Whether you can transfer the lease when you sell the business or need to leave. Most leases require landlord consent. Negotiate“Consent not to be unreasonably withheld, conditioned, or delayed,” and a carve-out for transfer to an affiliate or a buyer of the business.

HoldoverThe overrun penalty

What you owe if you stay past expiration — frequently 150–200% of rent, sometimes with consequential damages. Buildout delays make holdover far more common than tenants expect.

Relocation clauseThe rug-pull

Landlord's right to move you to comparable space in the building. Standard in multi-tenant office. NegotiateLandlord pays all moving, buildout, signage, and reprinting costs — and cap how far and how often.

CAM capsCost control

A ceiling on how fast controllable operating expenses can rise — often 5% per year, cumulative. Taxes and insurance are usually excluded from the cap, and that's normal.

SNDALender protection

Subordination, Non-Disturbance and Attornment. It means that if the landlord's lender forecloses, your lease survives and you stay. Without one, a foreclosure can terminate you.

Estoppel certificateRoutine paperwork

A signed statement confirming your lease terms and that nobody is in default, required when the building is sold or refinanced. Expect to sign these; just read them.

Delivery & commencementThe clock

What starts your rent. Tie commencement to the later of landlord's delivery in agreed condition and your permit issuance — never to lease execution. NegotiateAn outside date: if landlord hasn't delivered by then, you get day-for-day free rent, then a termination right.

RestorationThe end of term

Whether you must remove your improvements and restore the space at the end. A full restoration obligation on a heavy buildout can be a five-figure surprise on your way out the door.

The numbers a buyer has to know

NOINet operating income

Gross income minus operating expenses, before debt service and before income tax. It is the property's earning power, independent of how you financed it.

Cap rateNOI ÷ price

The unleveraged annual return. A property with $84,000 NOI priced at $1,050,000 trades at an 8.0% cap. Lower cap rate means higher price for the same income — and usually lower perceived risk.

Debt service coverageDSCR

NOI divided by annual loan payments. Most commercial lenders want 1.20–1.35 or better. For an owner-user purchase, lenders look at your business's cash flow instead.

Price per square footThe comparison metric

Purchase price divided by building square feet. The fastest way to sanity-check a price against recent sales of similar buildings.

Owner-user vs. investmentTwo different buys

An owner-user buys a building to operate their own business in it — and typically qualifies for far better financing. An investor buys it for the income stream from tenants. Many owners do both: buy the building, occupy part, lease the rest.

Due diligence before you close