Commercial Lease Terms Explained: The Lease by What Each Term Does to You

Commercial lease terms fall into three groups. What you pay: base rent, escalations, operating expenses, electricity and the deposit. What you get: a floor measured in rentable square feet, a delivery condition, an improvement allowance and free rent. What you can do later: renew, expand, sublet, assign or leave. In Manhattan the usual office lease is a gross lease with increases above a base year, not the net lease with CAM charges common elsewhere. Nearly every term is negotiable before signing, and the face rent is the one that moves least. Each term below gets a sentence or two and, where it helps, a link to the longer version.

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Updated 2026-10-03 · Nomad Group

What you pay: five terms on every rent bill

Base rent. The yearly price per rentable square foot. Multiply it by the square feet and divide by twelve for the monthly rent. Rent per square foot shows the sum.
Escalations. Scheduled increases, typically 2.5 to 3 percent a year on base rent, each applied to the already increased figure.
Operating expenses. The building's running costs: cleaning, staff, insurance, repairs. You pay your share of the growth over a base year, not the whole bill.
Electricity. Billed apart from rent, by submeter or as a flat charge, and usually $2 to $4 a square foot each year.
Security deposit. Cash or a letter of credit the landlord holds against the lease, sized to the company's credit.

What you get: space, condition and concessions

Rentable and usable square feet. Rentable is what you are billed on, and it includes a share of lobbies and corridors. Usable is what holds desks, and it runs 15 to 25 percent smaller.
Delivery condition. The state the landlord must hand the space over in, and the date. A vague description becomes an argument later.
Improvement allowance. A sum per square foot the landlord contributes to your buildout, reimbursed against invoices.
Free rent. Months with no base rent, usually at the start. The lease calls it abatement.

What you can do later: renew, expand, sublet, assign, leave

Renew. An option to extend for another term, at a rent set by a method written into the lease.
Expand. A right to take named extra space, or a right of first offer to see it before the market does.
Sublet. Renting part or all of your space to another company while your lease stays in place and you stay responsible.
Assign. Transferring the whole lease to a new tenant. On most forms the original tenant remains liable unless released.
Leave. Only a negotiated termination option lets a tenant end a lease early, on notice and for a fee. Without one, the exits are a sublet, an assignment or a deal with the landlord. Lease options covers the renewal, expansion and termination rights.

How a Manhattan lease differs from other markets

In retail, and in many office markets outside Manhattan, a tenant signs a net lease: a lower base rent, with the tenant's share of taxes, insurance and common area maintenance, known as CAM, billed on top. Manhattan offices rarely work that way. The standard here is a modified gross lease. One rent covers the building's taxes and running costs as they stand in a base year, usually the first year of the term, and the tenant pays its share of increases above that year.

The practical effect is that a Manhattan asking rent already contains costs a net quote leaves out, so the two cannot be compared until the net charges are added back. Gross and net leases sets the structures next to each other. Every floor in the block on this page is quoted the Manhattan way.

Floors asking $75 to $100 per square foot

Live from our listings · 6 of the 11, cheapest first

11 of the 46 floors with a published rent ask $75 to $100 per square foot per year, from 2,940 to 13,266 square feet.

Floors: 11
Sizes: 2,940-13,266 sq ft
Asking rent: $78-$98 / sq ft

Every available floor, with asking rents →

The full guide

This page is the short answer. The long one, with the numbers worked through, is here:

Are commercial lease terms negotiable?

Almost all of them, before signing. Free rent, the allowance, the escalation rate, the base year, the deposit and the options all move. The face rent moves least, because landlords protect the number their building is valued on. After signing, very little moves.

What is a base year in an office lease?

The reference year for cost increases. The landlord absorbs taxes and operating costs at that year's level, and you pay your share of anything above it. It should be the year you sign, not an earlier one.

What does it mean when a listing says full service?

It can mean two things. In lease language, the rent includes the building's operating costs, taxes and insurance. In marketing copy, it often means the space is furnished, wired and cleaned. Ask which one is meant before comparing two listings.

Where can a first-time tenant read each term in more depth?

The leasing glossary has an entry for each term, with a worked example, what can be negotiated and the common traps. For how any clause reads in your own lease, ask your attorney.

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