industrial-warehouse-lease

# Industrial / Warehouse Lease

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

## Quick Start

Gather before drafting:

1. **Parties** — legal names, entity types, addresses (Landlord and Tenant)
2. **Premises** — address, RSF (warehouse + office split), building/suite, legal description
3. **Appurtenant rights** — loading docks (count, exclusive vs. shared), truck court, parking, yard
4. **Economics** — base rent, escalation (fixed %, CPI, or FMV reset), commencement, abatement
5. **Term** — commencement trigger (execution, delivery, TI completion), expiration
6. **Permitted use** — Tenant's specific operations
7. **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