What to Know Before Signing a Commercial Lease in Los Angeles (2025 Guide)

Leasing commercial space in Los Angeles in 2025 comes with both opportunity and complexity. Whether you’re a tenant searching for your next location or an investor negotiating terms for a tenant-user, understanding current market dynamics, lease structures, and legal updates can protect your interests and help you negotiate smarter.

1. Understanding Commercial Lease Types

Before signing anything, know what kind of lease you’re agreeing to — the structure can dramatically change your total cost.

• Full-Service (Gross) Lease: The landlord covers most property expenses, such as taxes, insurance, and maintenance. You pay a single monthly rent, which keeps things predictable.

• Modified Gross Lease: A blend between full service and triple net. Some costs are included, others are passed through. Always confirm what’s covered.

• Triple Net (NNN) Lease: You pay base rent plus your share of property taxes, insurance, and maintenance. This is common in retail and industrial spaces, but can significantly increase your actual monthly cost.

• Lease Term: Most LA tenants choose 3- to 5-year leases for flexibility, while anchor or national tenants often sign for 10 years or more to secure pricing.

2. Clauses That Deserve Your Attention

Commercial leases in Los Angeles are dense, and some clauses have major financial consequences if overlooked.

• Operating Expenses & CAM (Common Area Maintenance): These can range widely depending on building class and location. Ask for expense history and confirm whether there’s an annual cap on increases.

• Rent Escalations: Leases often include annual increases (typically 3 % – 4 %) or CPI adjustments. Make sure you understand when and how rent will rise.

• Sublease & Assignment Rights: If your business expands or pivots, having the ability to sublet or assign the lease could save you from paying for unused space.

• Renewal Options: Secure the right to renew at pre-set terms so you’re not renegotiating from scratch at market rates later.

• Early Termination: Some landlords allow early exit under certain conditions — others don’t. Know the penalties in advance.

• Legal Protections: As of 2025, California’s new commercial tenant protections (SB 1103) require extra notice and translation rights for small tenants and limit how certain costs can be passed through.

3. Los Angeles Market Overview – 2025

Knowing what’s happening in the market helps you negotiate from strength.

• Office: Vacancy across Los Angeles County remains high, hovering around 15 – 16 %. Average asking rents are roughly $3.50 per square foot (full service). Many tenants are downsizing, which means landlords are more open to concessions like free rent or build-out credits.

• Industrial: Demand has cooled slightly after years of record highs. Average asking rents are around $1.35 per square foot (NNN), with vacancies in the 7 % range.

• Retail: Strong consumer corridors such as Beverly Grove, Downtown, and Culver City remain competitive, but secondary markets offer opportunities for better terms. Asking rents average around $3.00 per square foot (NNN) and vary by foot traffic and visibility.

If you’re a tenant, this is a good time to negotiate improvements or flexibility. If you’re a landlord, focus on stability and tenant quality rather than chasing the absolute highest rate.

4. Negotiation Tips That Actually Make a Difference

• Start with Comps: Gather recent lease data from the same submarket and building type.

• Cap Pass-Throughs: Negotiate limits on CAM or operating expense increases to prevent surprise spikes.

• Tenant Improvement Allowances: For longer terms, request a credit toward build-out or remodeling. Landlords are more open to this in 2025 due to slower leasing activity.

• Renewal and Expansion Options: Lock in rates now for any future growth.

• Sublease Flexibility: Push for language that says landlord consent “shall not be unreasonably withheld.”

• Short-Term Advantage: In a shifting market, consider a 3- to 5-year lease with renewal options instead of committing to 10 years upfront.

• Get a Second Set of Eyes: Always have your lease reviewed by someone experienced in LA commercial real estate — an attorney or broker who knows the market can often catch costly details you might miss.

5. Checklist Before You Sign

• Confirm the rent is quoted as base rent or gross rent — they’re not the same.

• Verify the square footage basis (usable vs rentable).

• Request the last 3 years of operating expenses.

• Review the rent escalation schedule and renewal terms.

• Check that your use is permitted under zoning.

• Verify parking rights, signage, and access hours.

• Understand maintenance obligations for HVAC, plumbing, and roof.

• Make sure your insurance responsibilities are clearly stated.

• Review any personal guarantees carefully — they can outlive your lease.

6. Frequently Asked Questions

Q: How long should my lease be? Most small to mid-sized businesses sign 3- to 5-year terms. Larger tenants or those doing custom build-outs usually commit to 7-10 years for stability.

Q: How much do CAM fees usually cost in Los Angeles? For office and retail properties, expect anywhere from $8 to $20 per square foot annually, depending on building age and amenities.

Q: What’s the biggest mistake tenants make? Not verifying what’s included in their rent and assuming “$3.50 per foot” is the full cost. Triple-net leases can add 20 % – 40 % in additional expenses.

Q: Can I negotiate if the rent seems high? Yes. With higher vacancies and slower leasing velocity across most submarkets, tenants often have more leverage now than in previous years.

Q: Do I need an agent to review the lease? It’s highly recommended. Even experienced business owners can overlook terms that cost thousands over time. An agent familiar with Los Angeles submarkets can help spot red flags and negotiate credits or concessions.

Contact

If you’re reviewing a commercial lease or looking for a new space anywhere in Los Angeles, I can help break down the terms, estimate total costs, and highlight where you have room to negotiate. Send me the address and a quick overview of your business — I’ll give you an honest read before you sign.