2026 Guide to Commercial Lease Terms Every California Business Owner Should Know

Entering a commercial real estate lease in California can be overwhelming—especially if you're new to leasing or expanding your business. The lease agreement sets the tone for your operational flexibility, monthly expenses, and legal responsibilities. That's why it’s critical to understand the most common lease terms you'll encounter in 2026.

Key Commercial Lease Terms to Know

1. Base RentThis is the starting point for your monthly rental payment. It may increase annually, so be sure to check for escalation clauses.

2. CAM Fees (Common Area Maintenance)CAM charges are shared costs for areas like parking lots, lobbies, and landscaping. Ask for an estimate to avoid surprises.

3. Rent Escalation ClauseCalifornia landlords often include scheduled rent increases—based on CPI or a fixed percentage. Read the fine print carefully.

4. Lease Term & Renewal OptionsKnow the length of your lease and what’s required to renew. Longer terms may offer more negotiating power.

5. Tenant Improvements (TI)Are you remodeling the space? Check if the landlord offers a TI allowance, and clarify who pays for what.

6. Use ClauseThis limits how you can use the property. If your business model evolves, this clause could limit future flexibility.

California-Specific Lease Considerations in 2026

• Sustainability clauses are increasingly being added for energy efficiency.

• ADA compliance may fall on the tenant depending on lease terms.

• Earthquake insurance and other natural disaster coverage should be clarified upfront.

Understanding your commercial real estate lease terms can help prevent costly legal issues and support long-term success. If you're leasing in California, work with an experienced broker or legal advisor to navigate the details.

Get informed before you sign—your future lease depends on it!