What to Look for Before Signing a Commercial Lease for Your Salon, Spa, or Retail Space

Signing a commercial lease is one of the biggest financial commitments a small business owner makes. For a salon, spa, studio, or retail boutique, the lease governs where you operate, how much you pay, what you can do with the space, and what happens if things go wrong. Most of those terms were written by the landlord’s attorney, which means they were written to protect the landlord.

Here is what to review carefully before you sign.

Commercial Leases Are Not Like Residential Leases

This is the first thing to understand. Residential leases come with significant tenant protections under state law. Commercial leases do not. Almost everything is negotiable, but only if you negotiate before signing. Once you are locked in, you are locked in.

Many first-time retail and salon tenants sign leases presented by landlords without reading them carefully, without asking for changes, and without legal review. The lease that shows up in your inbox is a starting point, not a final offer.

Base Rent and Escalation Clauses

The monthly rent number is only part of what you are agreeing to pay. Most commercial leases include escalation clauses that allow the landlord to increase rent annually, either by a fixed percentage or tied to a cost-of-living index like the Consumer Price Index (CPI).

A 3% annual increase on a $5,000 per month lease adds up quickly over a five-year term. You need to know the total financial commitment over the full lease period, not just the starting number. Model out the rent at year three and year five before you sign.

Also look for percentage rent clauses, which are common in retail leases. These require you to pay additional rent once your gross sales exceed a certain threshold. If your business does well, the landlord gets a cut.

CAM Charges and the True Cost of the Space

Many commercial leases, particularly in multi-tenant retail centers, charge tenants for common area maintenance (CAM). This covers the landlord’s cost of maintaining shared spaces: parking lots, hallways, lobbies, landscaping, and building systems.

CAM charges are often not included in the quoted rent figure. They can add hundreds or thousands of dollars per month to your actual cost. Before you compare spaces, get the full CAM figure and understand what is included, whether it is capped, and whether the landlord can pass through capital improvement costs as well as maintenance costs.

For salon and spa operators, also look at utility pass-throughs. If the lease requires you to pay your share of the building’s total utility costs rather than metering your own usage, a water-heavy practice (think shampoo bowls, pedicure basins) can generate significant unexpected costs.

The Personal Guarantee

Most commercial landlords require a personal guarantee, which means you are personally liable for the lease obligations if your business entity cannot pay. If your LLC defaults on the lease, the landlord can come after your personal assets.

Personal guarantees are common and often required, but they are also negotiable. Options to discuss include:

A limited guarantee that caps your personal exposure at a set number of months of rent rather than the full remaining term
A “good guy” clause that releases you from personal liability if you give proper notice and vacate the space in good condition
A burn-down provision where your personal exposure decreases over time as you demonstrate a payment history

Never sign a full, unlimited personal guarantee for a long lease term without understanding what you are taking on personally.

Permitted Use and Exclusivity

The permitted use clause defines what you are allowed to do in the space. If your lease says “hair salon,” it may not permit adding esthetics services, nail services, or retail product sales without a lease amendment. Read it carefully and make sure it covers your full business model, including anything you plan to add in the next two to three years.

For retail and salon tenants in multi-tenant spaces, an exclusivity clause is worth asking for. An exclusivity clause prevents the landlord from renting another unit in the same property to a direct competitor. Without one, a landlord can lease the space next door to another salon or spa after you have already built out your location and your client base.

Exclusivity clauses are easier to get in smaller centers than in large shopping centers, but they are worth requesting regardless.

Buildout, Tenant Improvement Allowance, and Who Pays for What

Most retail and salon spaces require significant buildout before they are functional. Plumbing for shampoo bowls, electrical for treatment equipment, partition walls, flooring, reception areas: these costs add up fast. Before you sign, understand:

Who is paying for the buildout? Some landlords offer a tenant improvement (TI) allowance, a set amount they contribute toward buildout costs. Others offer a period of free rent while you build out. Some offer neither. Get any landlord contribution in writing, with specifics on how and when it is paid.

Who owns the improvements? Fixtures and improvements you install may become the landlord’s property at the end of the lease. If you are investing in custom cabinetry, plumbing, or built-in equipment, understand whether you can take it with you or whether you are leaving it behind.

Who is responsible for repairs? Commercial leases vary significantly on this. Some require tenants to maintain everything within the four walls, including HVAC systems. Others split responsibilities between landlord and tenant. An HVAC failure in a salon or spa is not a minor inconvenience, and being responsible for replacing a system you did not choose can be an expensive surprise.

Lease Term, Renewal Options, and Exit Rights

A five-year lease with no renewal option means you can be displaced when the term ends, even if your business is thriving. A well-negotiated lease includes options to renew at defined terms so you have the right to stay.

Look also at what happens if you need to exit before the lease ends. Most commercial leases hold you liable for the full remaining rent if you vacate early. Protections worth negotiating:

Assignment and subletting rights: The right to assign your lease to a buyer if you sell the business, or to sublet the space if your situation changes. Landlords often require consent, but the lease should not give them unlimited discretion to refuse.

Early termination clause: Some leases allow termination after a defined period if you pay a penalty, often three to six months of rent. This is not always available, but it is worth asking for in longer-term leases.

Co-tenancy clause: Relevant for retail spaces in shopping centers. If an anchor tenant leaves and foot traffic drops significantly, a co-tenancy clause can give you the right to reduce rent or terminate. Harder to get, but worth knowing exists.

What Gets Missed Most Often

In my experience reviewing commercial leases for salon, spa, and retail clients, the provisions that cause the most problems after signing are:

Signage restrictions. Some leases limit the size, placement, or type of signage you can use. For a retail business that depends on visibility from the street, signage restrictions can directly affect your revenue.

Hours of operation requirements. Retail center leases sometimes require tenants to be open during defined hours. If you run an appointment-based salon or spa, mandatory hours of operation may conflict with your business model.

Relocation clauses. Some landlords retain the right to move you to a different space in the same building or center. If your location within the property matters to your business, make sure this clause is limited or removed.

Personal guarantee survival. In some leases, the personal guarantee survives assignment, meaning even if you sell your business and the buyer assumes the lease, you may still be personally on the hook if the buyer defaults. Always confirm what happens to your personal guarantee if you transfer the business.

The Bottom Line

A commercial lease is a multi-year financial commitment, often your largest business expense. The version the landlord sends you is a starting point. Most terms are negotiable if you ask before signing, and almost none are negotiable after.

Having an attorney review the lease before you sign is one of the highest-return legal investments a small business owner can make. Not because something will necessarily go wrong, but because understanding what you are agreeing to, and negotiating the terms that work against you, puts you in a fundamentally stronger position for the life of your business.

If you have a commercial lease to review before signing, book a consultation to go through it together.

This article is for informational purposes only and does not constitute legal advice. For guidance specific to your situation, book a consultation with Antonella Colella, Esq.