INDUSTRIAL / WAREHOUSE LEASE DRAFTING INSTRUCTIONS

You are tasked with drafting a comprehensive Industrial or Warehouse Lease agreement. This is a sophisticated commercial real estate transaction document that requires precision, attention to regulatory compliance, and protection of both parties' interests. The lease should reflect industry-standard practices for industrial and warehouse properties while being tailored to the specific transaction details provided.

DOCUMENT STRUCTURE AND FORMATTING

Begin with a clear, professional title centered at the top of the document. The agreement should open with a preamble identifying this as a lease agreement, the effective date, and the parties involved with their complete legal names and principal addresses. Structure the document with numbered articles and sections for easy reference. Use defined terms consistently throughout, with initial capitalized terms defined in a Definitions section or upon first use. Ensure the document maintains a formal, professional tone appropriate for a binding commercial lease agreement.

PARTIES AND PREMISES IDENTIFICATION

Draft a comprehensive identification section that clearly establishes the Landlord's complete legal name, entity type, and principal place of business, followed by the same information for the Tenant. Describe the Premises with specificity, including the complete street address, legal description if available, approximate square footage of warehouse space, approximate square footage of office space, and any unique identifying features such as building number or suite designation. Include a description of any appurtenant rights such as parking areas, loading docks, truck courts, or yard space. If the property is part of a larger industrial park or complex, describe the relationship between the leased Premises and common areas.

LEASE TERM AND RENT PROVISIONS

Establish the lease commencement date and expiration date with precision, specifying the total term in years and months. Address whether the term begins upon lease execution, delivery of possession, or completion of any tenant improvements. Detail the Base Rent amount, payment schedule (typically monthly), due date (usually the first of each month), acceptable payment methods, and the address for rent payment. If there are scheduled rent increases, describe the escalation mechanism clearly, whether it involves fixed percentage increases, Consumer Price Index adjustments, or fair market value resets. Include provisions for any rent abatement periods, free rent, or other economic concessions, ensuring these are tied to specific conditions such as timely lease execution or completion of improvements.

LEASE TYPE AND EXPENSE ALLOCATION

Clearly designate the lease structure, typically as a Triple Net (NNN) lease for industrial properties, and explain what this means in practical terms. Specify that Tenant shall be responsible for paying Tenant's proportionate share of all Operating Expenses in addition to Base Rent, or if this is a single-tenant building, that Tenant bears one hundred percent of such costs. Define Operating Expenses comprehensively to include real estate taxes and assessments, building and liability insurance premiums, common area maintenance costs, property management fees if applicable, and reserves for capital improvements. Address how Operating Expenses will be estimated, billed, reconciled annually, and what documentation Landlord must provide. Specify any expenses explicitly excluded from Operating Expenses, such as costs of initial construction, leasing commissions, or costs attributable to other tenants' specific requirements.

UTILITIES AND SERVICES

Delineate responsibility for all utilities serving the Premises, typically requiring Tenant to contract directly with utility providers and pay for all electricity, natural gas, water, sewer, storm water, telephone, internet, and waste removal services. Address whether utilities are separately metered or if any allocation formula applies for shared services. Specify that Tenant must maintain continuous utility service throughout the lease term and that any interruption in utilities, except those caused by Landlord's negligence or willful misconduct, shall not constitute a breach of the lease or entitle Tenant to rent abatement.

PERMITTED USE AND RESTRICTIONS

Define the Permitted Use of the Premises with sufficient breadth to accommodate Tenant's business needs while protecting Landlord's interests and ensuring compliance with zoning regulations. Typical permitted uses include warehousing and distribution, light manufacturing and assembly, research and development, and ancillary office operations. Explicitly prohibit uses that would violate applicable laws, create nuisances, increase insurance premiums, or damage the property. Address restrictions on outdoor storage, signage, alterations to the property, and any exclusive use provisions if applicable. Include provisions requiring Tenant to maintain all necessary business licenses and permits and to operate in compliance with all applicable laws, regulations, and covenants affecting the property.

MAINTENANCE AND REPAIR OBLIGATIONS

Establish a comprehensive maintenance and repair framework appropriate for an industrial lease. In a typical NNN lease, assign to Tenant the obligation to maintain the entire Premises in good condition and repair, including structural elements such as the roof, foundation, exterior walls, and load-bearing walls, as well as all building systems including HVAC, plumbing, electrical, fire suppression, and life safety systems. Require Tenant to maintain the parking areas, loading docks, truck courts, and any yard areas in clean, safe, and operational condition. Specify that Tenant must engage qualified, licensed contractors for all major repairs and must provide Landlord with advance notice of any significant maintenance work. Address Landlord's right to inspect the Premises and require repairs if Tenant fails to maintain the property adequately. Include provisions addressing casualty damage, distinguishing between minor damage that Tenant must repair and substantial damage that may trigger termination rights.

ENVIRONMENTAL COMPLIANCE AND HAZARDOUS MATERIALS

Draft robust environmental provisions recognizing the heightened risks associated with industrial properties. Prohibit Tenant from using, generating, storing, or disposing of any Hazardous Materials on the Premises without Landlord's prior written consent, except for ordinary office supplies and materials customarily used in Tenant's permitted business operations in minimal quantities and in compliance with all applicable Environmental Laws. Define Hazardous Materials broadly to include substances regulated under federal, state, and local environmental laws. Require Tenant to indemnify and hold Landlord harmless from any environmental contamination caused by Tenant's operations, including cleanup costs, regulatory penalties, and third-party claims. Mandate that Tenant immediately notify Landlord of any spills, releases, or environmental violations and that Tenant conduct any required environmental remediation at Tenant's sole cost. Consider requiring Tenant to provide environmental insurance or periodic environmental assessments depending on the nature of Tenant's operations.

LOADING DOCKS, TRUCK COURTS, AND OPERATIONAL AREAS

Address the use of loading docks, truck courts, and other operational areas critical to industrial operations. Specify the number of loading docks allocated to Tenant, whether such allocation is exclusive or shared, and any scheduling or priority arrangements if docks are shared. Establish rules for truck court usage, including permissible hours for deliveries and shipments, truck idling restrictions, and maintenance of clear access ways. Address responsibility for maintaining and repairing loading dock equipment such as dock levelers, bumpers, and overhead doors. Include provisions regarding trailer storage, if permitted, and any restrictions on the duration or location of such storage.

INSURANCE REQUIREMENTS

Establish comprehensive insurance requirements appropriate for industrial operations. Require Tenant to maintain Commercial General Liability insurance with minimum limits of at least one million dollars per occurrence and two million dollars aggregate, naming Landlord and Landlord's lender as additional insureds. Mandate property insurance on an "all-risk" or "special form" basis covering the full replacement cost of Tenant's personal property, trade fixtures, and any improvements Tenant has made to the Premises. Require workers' compensation insurance in statutory amounts if Tenant has employees. Consider requiring business interruption insurance, automobile liability insurance, and umbrella or excess liability coverage depending on the nature of Tenant's operations. Specify that all insurance policies must be written by insurers with an A.M. Best rating of at least A-VII, must provide for thirty days' advance written notice to Landlord before cancellation or material modification, and that Tenant must provide certificates of insurance to Landlord before taking possession and annually thereafter.

ALTERATIONS AND IMPROVEMENTS

Address Tenant's rights and obligations regarding alterations and improvements to the Premises. Distinguish between minor, cosmetic alterations that Tenant may complete without Landlord's consent and major structural or system alterations requiring Landlord's prior written approval. Establish a process for requesting approval, including submission of plans and specifications, proof of contractor licensing and insurance, and obtaining necessary permits. Specify that all alterations must comply with applicable building codes and regulations and must be performed in a good and workmanlike manner. Address ownership of improvements, typically providing that all alterations become Landlord's property upon installation but may be required to be removed at lease termination if Landlord so elects. Include mechanics' lien waiver provisions requiring Tenant to prevent the filing of any liens against the property and to bond around or discharge any liens that are filed.

ASSIGNMENT AND SUBLETTING

Establish controls on Tenant's ability to assign the lease or sublet the Premises while providing reasonable flexibility for legitimate business needs. Typically prohibit assignment or subletting without Landlord's prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed. Specify criteria Landlord may consider in evaluating proposed transferees, including financial strength, business reputation, intended use of the Premises, and compatibility with other tenants. Address whether Landlord has a recapture right if Tenant seeks to assign or sublet. Provide that any permitted assignment or sublease does not release Tenant from liability under the lease. Consider including exceptions for transfers to affiliates or in connection with corporate reorganizations, mergers, or sales of substantially all of Tenant's assets, subject to specified conditions.

DEFAULT AND REMEDIES

Draft comprehensive default provisions protecting both parties' interests. Define events of default to include non-payment of rent or other monetary obligations beyond applicable cure periods, violation of lease covenants that continues beyond notice and opportunity to cure, bankruptcy or insolvency proceedings, abandonment of the Premises, and any other material breach. Provide Landlord with full remedies available under applicable law, including termination of the lease, re-entry and repossession, acceleration of rent, recovery of damages, and specific performance. Address Tenant's right to cure defaults and specify reasonable cure periods, typically ten days for monetary defaults and thirty days for non-monetary defaults, or such longer period as may be reasonably necessary if the default cannot reasonably be cured within thirty days and Tenant is diligently pursuing a cure. Include provisions for late charges and interest on overdue amounts. Address Landlord's right to perform Tenant's obligations if Tenant fails to do so and to recover such costs from Tenant.

CASUALTY AND CONDEMNATION

Establish clear procedures for addressing casualty damage and condemnation. For casualty damage, distinguish between substantial damage that may trigger termination rights and minor damage that must be repaired. Specify timeframes for Landlord to elect whether to repair or terminate, typically thirty to sixty days after the casualty event. Address rent abatement during any repair period, typically providing for abatement proportionate to the unusable portion of the Premises. For condemnation, provide that if all or a substantial portion of the Premises is taken, either party may terminate the lease. Define what constitutes a substantial taking, typically twenty-five to fifty percent of the floor area or parking. Address allocation of condemnation awards, typically providing that Landlord receives the entire award except that Tenant may claim separately for loss of Tenant's personal property, trade fixtures, and relocation expenses if such claim does not reduce Landlord's award.

SUBORDINATION, NON-DISTURBANCE, AND ATTORNMENT

Include provisions addressing the relationship between the lease and any mortgage or deed of trust encumbering the property. Provide that the lease is subordinate to any existing or future mortgage, subject to Tenant receiving a non-disturbance agreement from the lender. Specify that Tenant will execute a subordination, non-disturbance, and attornment agreement in a form reasonably acceptable to Landlord's lender, providing that if the lender forecloses, Tenant's rights under the lease will be recognized so long as Tenant is not in default, and Tenant will attorn to the successor owner. Address Tenant's obligation to provide lenders with notice of Landlord defaults and opportunity to cure.

GENERAL PROVISIONS

Include standard commercial lease provisions addressing notices, specifying acceptable methods of delivery and addresses for each party. Address governing law, typically the law of the state where the property is located. Include a severability clause providing that if any provision is found unenforceable, the remainder of the lease remains in effect. Address amendments, requiring that any modification be in writing and signed by both parties. Include an integration clause stating that the lease constitutes the entire agreement and supersedes all prior negotiations and agreements. Address waiver provisions, specifying that no waiver of any breach constitutes a waiver of any subsequent breach. Include provisions regarding attorneys' fees, typically providing that the prevailing party in any litigation may recover reasonable attorneys' fees and costs.

SIGNATURE BLOCKS AND EXECUTION

Conclude with properly formatted signature blocks for both Landlord and Tenant. For entity parties, include the entity's full legal name, signature lines for authorized representatives, printed names and titles of signatories, and date of execution. If the lease requires notarization or witnesses under applicable state law, include appropriate acknowledgment forms. Consider including a rider or exhibit for any additional provisions, schedules, or attachments such as legal descriptions, site plans, rules and regulations, or forms of estoppel certificates and subordination agreements.

DRAFTING STANDARDS AND REVIEW

Ensure the final document is professionally formatted, free of typographical and grammatical errors, and internally consistent in its use of defined terms and cross-references. Review all monetary amounts, dates, and measurements for accuracy. Verify that all exhibits and attachments referenced in the lease are included and properly labeled. Confirm that the lease complies with applicable landlord-tenant laws and commercial leasing regulations in the relevant jurisdiction. The completed lease should be a comprehensive, enforceable agreement that clearly establishes the rights and obligations of both parties and provides mechanisms for addressing foreseeable issues that may arise during the lease term.