Commercial Lease in Utah

Gross, modified gross, or triple net

Compare offers on the all-in number: base rent plus operating charges, per square foot per year. A $14 NNN space with $5 in charges costs more than an $18 gross space. For any NNN or modified gross deal, ask the landlord for the current year’s expense budget and the last two years of actual charges per square foot. A landlord who won’t produce them is telling you something.

What’s negotiable

Nearly everything. These are the terms that move money or decide what happens in year four:

• Base rent and escalations. Fixed annual increases, often 3%, are easier to budget than increases tied to CPI. On a longer term, ask for a flat first two years.
• Term and renewal options. One or two options to renew, with the renewal rent either stated in the lease or set by a defined fair market process. The option belongs to you, so you decide whether to stay.
• Improvement allowance and free rent. The landlord’s two levers for your buildout. Get the allowance in dollars per square foot, get in writing when it is paid, and get in writing who keeps any unspent balance. The glossary covers TI allowance and the rest of the vocabulary.
• Caps on operating expenses. Cap annual increases on controllable costs such as landscaping and management fees, 5% is a common ask. Taxes and insurance stay uncapped because the landlord doesn’t control them. Ask for the right to audit the reconciliation.
• Personal guarantee. Limit it. A dollar cap, a rolling 6 to 12 months of rent, or a burn-off after two or three years of on-time payment are all normal asks.
• Assignment and subletting. The right to assign the lease to a buyer of your business, with the landlord’s consent not unreasonably withheld. This clause decides whether you can sell the business later.
• HVAC and repairs. In NNN deals the tenant usually maintains the HVAC. Cap your exposure: you handle repairs and the landlord handles replacement, or a replacement cost is spread over its useful life instead of billed at once.
• Holdover. Many leases charge 150% to 200% of the last month’s rent if you stay past the end date. Under Utah Code 78B-6-802, a lease for a set term ends on that date with no notice from anyone, so start the renewal conversation a year out.

Retail tenants should also ask for exclusive use, so the landlord can’t lease to a direct competitor in the same center. Tenants in multi-tenant buildings should strike any relocation clause or make the landlord pay every cost of a move.

What Utah law settles, and what it leaves to the lease

• Longer than a year, in writing. Utah Code 25-5-3 makes a lease longer than one year void unless it is in writing and signed by the landlord or an agent authorized in writing. A handshake on a three-year deal binds nobody.
• Deposits. Utah’s deposit statute, Utah Code 57-17, covers residential dwelling units. For commercial space there is no state cap on the deposit and no statutory deadline to return it. The lease sets both, so put a return date in it.
• Default. Under Utah Code 78B-6-802, a landlord can serve a written pay-or-quit notice the day rent is late, and the tenant has three business days to pay or surrender the space before the landlord can file for unlawful detainer. For other lease violations the notice is three calendar days to cure or quit. Negotiate longer cure periods into the lease itself: written notice and 5 to 10 days for rent, 30 days for anything else.
• Everything else. Repairs, access, signage, parking, insurance limits, and who pays the broker come from the lease. A judge will hold both sides to what it says. Have a Utah real estate attorney read the final draft. I mark up the business terms and flag the clauses to send them.

How I work a lease

For tenants:

1. A 15-minute call. Square footage, use, budget, timing, and the details that rule buildings out: parking count, power, ceiling height, dock doors, zoning.
2. A survey of options. Listings plus the buildings I know are coming available through the owners, across Weber, Davis and Box Elder Counties.
3. Tours and a side-by-side. Total occupancy cost for each space, including the buildout you would need, so the comparison is real.
4. Proposals to two or three landlords at once. Competing offers are what move rent, free months, and the improvement allowance.
5. Lease markup. I negotiate the business terms above. Your attorney covers the legal language.
6. Buildout and move-in. I stay on it through the contractor’s schedule and the day you open.

For landlords: a rent recommendation from Weber County comps, marketing to the brokers and tenants active in Northern Utah, a credit check on every applicant with financial statements and tax returns, and a lease that protects the building’s net operating income. That matters when you sell or refinance, because commercial property is valued on NOI.

I own commercial property in Ogden and sit on the landlord side of my own leases, so I know which clauses get used and which ones collect dust. Current space for lease is on the Ogden commercial real estate page. If what you need isn’t listed, call me with the size, use and budget.