Industrial / Warehouse Lease

Drafts a litigation-tested, NNN-structured Industrial or Warehouse Lease tailored to transaction-specific details.

Quick Start

Gather before drafting:

Parties — legal names, entity types, addresses (Landlord and Tenant)
Premises — address, RSF (warehouse + office split), building/suite, legal description
Appurtenant rights — loading docks (count, exclusive vs. shared), truck court, parking, yard
Economics — base rent, escalation (fixed %, CPI, or FMV reset), commencement, abatement
Term — commencement trigger (execution, delivery, TI completion), expiration
Permitted use — Tenant's specific operations
Jurisdiction — state where property is located

Article Structure

| # | Article | Key Points | |---|---------|------------| | 1 | Parties & Premises | Legal names; RSF breakdown; appurtenant rights; park relationship | | 2 | Term | Commencement trigger; expiration; option periods | | 3 | Base Rent & Escalations | Monthly amounts; due 1st; escalation mechanism; conditional abatement | | 4 | Lease Type & OpEx | NNN designation; inclusions/exclusions; allocation method; annual reconciliation | | 5 | Utilities | Direct metering; Tenant contracts directly; no abatement except LL negligence | | 6 | Permitted Use | Broad for operations; prohibit nuisance/zoning violations/insurance increases | | 7 | Maintenance & Repair | Tenant maintains all: roof, structure, HVAC, plumbing, electrical, fire suppression, docks, parking | | 8 | Environmental | Hazmat prohibition with de minimis carve-out; Tenant indemnity; spill notice; remediation at Tenant cost | | 9 | Loading Docks & Truck Court | Dock count/exclusivity; delivery hours; idling limits; equipment maintenance; trailer storage | | 10 | Alterations | Cosmetic vs. structural threshold; plan approval; lien waiver; removal election | | 11 | Insurance | See Insurance table below | | 12 | Assignment & Subletting | Consent not unreasonably withheld; recapture right; affiliate exception; Tenant remains liable | | 13 | Default & Remedies | See Default table below | | 14 | Casualty & Condemnation | See Casualty table below | | 15 | SNDA | Subordinate to mortgage; lender-form SNDA; non-disturbance condition; Tenant notice of LL defaults | | 16 | General Provisions | Notices; governing law (property state); severability; integration; no oral modification; prevailing-party fees | | 17 | Signatures | Entity name; signatory name/title; date; notarization if required |

Insurance Requirements

| Coverage | Minimum | Notes | |----------|---------|-------| | CGL | $1M occ / $2M agg | LL + LL's lender as additional insureds | | Property (all-risk) | Full replacement of Tenant FF&E + TIs | — | | Workers' Comp | Statutory | If Tenant has employees | | Umbrella | As warranted | Recommend for heavy industrial | | Business Interruption | As warranted | Optional | | Auto Liability | As warranted | Optional; fleet operations |

Policy standards: A.M. Best ≥ A-VII; 30-day cancellation notice; certificates before possession and annually.

Default & Remedies

| Type | Notice | Cure Period | |------|--------|-------------| | Monetary (rent, OpEx) | Written | 5–10 days | | Non-monetary breach | Written | 30 days (extendable if diligent) | | Bankruptcy / insolvency | None | Immediate | | Abandonment | None | Immediate |

LL remedies: termination, re-entry, acceleration, damages, specific performance, self-help with cost recovery. Monetary default: late charge + interest from due date.

Casualty & Condemnation

| Event | Threshold | Election Period | Rent Abatement | |-------|-----------|-----------------|----------------| | Minor casualty | LL must repair | N/A | Proportionate | | Substantial casualty | Either may terminate | 30–60 days | Proportionate; full if total | | Partial condemnation | <25–50% floor area | N/A; continues | Proportionate | | Substantial condemnation | ≥25–50% floor area | Either may terminate | Full |

Award: LL receives entire award; Tenant claims separately for personal property, trade fixtures, and relocation (must not reduce LL's award).

Defined Terms

Use consistently throughout:

Base Rent — monthly fixed rent (Art. 3)
Operating Expenses — NNN pass-throughs (taxes, insurance, CAM, mgmt fees); exclude initial construction, leasing commissions, other-tenant costs
Premises — demised space (Art. 1)
Hazardous Materials — substances regulated under federal, state, or local environmental law
Tenant's Proportionate Share — Premises RSF ÷ Building RSF (100% if single-tenant)
Permitted Use — as specified by client

Pitfalls & Checks

NNN default: Industrial leases are presumptively NNN; flag clearly if gross or modified gross
Environmental: Heighten scrutiny for manufacturing/chemical-storage tenants; consider environmental insurance or periodic Phase II assessments
Lien law: Mechanics' lien statutes vary by state — tailor lien waiver and bonding to jurisdiction [VERIFY state-specific requirements]
Dock equipment: Specify whether levelers, seals, and overhead doors are LL or Tenant property; clarify repair responsibility
SNDA: Never subordinate without non-disturbance protection; confirm lender's preferred form
Exhibits: Attach Exhibit A (legal description/site plan), Exhibit B (rules and regulations), Exhibit C (SNDA/estoppel form)
Jurisdiction: Confirm compliance with state LL-T statutes, local zoning, and municipal industrial-operations requirements