The premises clause defines the property you are leasing, usually by address, legal description and a site plan exhibit, along with any rights to shared areas, parking and yard. Most industrial leases state that square footage is approximate and that rent will not change if the building measures larger or smaller. For a warehouse user, the exhibit matters as much as the number.
What this clause does
The premises section tells you what you are paying for. In a single-tenant building that usually means the building and the land around it: the truck court, yard, parking and landscaping. In a multi-tenant park it means your unit, plus shared rights to drive aisles, parking and other common areas the landlord controls.
For an industrial user, the details that matter live in the exhibits. A good site plan shows the building footprint, the dock-high and grade-level doors assigned to you, trailer parking and any fenced or secured yard. If a right is not shown on the exhibit or described in the text, do not assume it comes with the building.
If you are leasing part of a larger building, the demising line matters. Know where the wall between you and your neighbor sits, which dock positions and electrical service belong to your unit, and whether shared equipment, such as a fire riser or a main electrical room, sits inside your space and requires access for others.
Just as important is what is left out. Owners sometimes reserve the roof for solar or telecom leases, keep a strip of land for future development, or hold parking for a neighbor. Ask directly, and get the answer in the lease.
Square footage is an estimate
Buildings are measured using published industry standards, but different architects applying the same standard to the same building will return different totals. Wall thickness, canopies, mezzanines and exactly where the line is drawn all move the result.
That is why most leases say the stated square footage is approximate and that rent is a negotiated figure, not a formula that adjusts if someone measures later. You are agreeing to a monthly rent for this building, not a rate that floats with a tape measure.
My advice is to confirm the size is in the right range rather than chase an exact figure. If something looks off, have your architect review the plans. Disputing a few hundred feet at the end of a negotiation spends goodwill you may need for items that matter more.
When the number does matter
In a multi-tenant building, your share of operating expenses is usually your square footage divided by the total for the building or project. An error there repeats every month for the whole term. Ask how both figures were derived, and ask that your share not rise if the owner remeasures.
Floor area is not the whole story for a warehouse. Usable cube depends on clear height, column spacing and sprinkler design. Advertised clear heights are not always verified, so measure it yourself with a laser at the eave and under the lowest beam, and note where sprinkler lines drop below that. Those numbers decide how high you can rack.
Yard and parking deserve the same scrutiny. If you run trucks, confirm in writing how many trailer stalls you get, whether they are exclusive, whether you can fence the yard and whether overnight trailer or container storage is allowed. City parking requirements and park rules can limit what the site plan appears to offer.
Getting it in writing
Attach a site plan that marks the premises, your exclusive areas and the shared areas. List dock and grade doors and any yard or trailer parking you are counting on. If a specific feature matters to your operation, such as a mezzanine, a rail spur or a fenced yard, describe it.
Check power as well. Amperage and voltage rarely appear in the premises description, yet for a manufacturer, or an operation running electric forklifts and automation, the electrical service can decide whether the building works. If you are counting on a certain service size, list it. On a large or irregular site, a survey or title review can also reveal easements and setbacks that limit where you fence or park trailers.
Then have a real estate attorney review how the premises, common area and rules sections fit together, since an owner's right to change shared areas often sits in a different part of the lease.
If you are the tenant
- Attach a site plan exhibit showing your exclusive yard, trailer stalls, dock doors and grade doors.
- In a multi-tenant park, confirm how your expense share is calculated and ask that it not increase if the owner remeasures.
- Verify clear height with a laser measure and check sprinkler clearances before you design racking.
- Ask whether the owner is reserving the roof, any land or any parking, and get the answer in the lease.
- Confirm city parking counts and park rules support your truck and employee parking plan.
If you are the owner
- State that square footage is approximate and that rent does not adjust based on a later measurement.
- Use a consistent measurement approach across a project so pro rata shares add up and hold up in an expense audit.
- Clearly reserve any roof, land or parking rights you intend to keep, and show them on the exhibit.
Go deeper in Justin's books
Both books walk through leases chapter by chapter, from the tenant side and the owner side.
If you want to watch a deal die quickly, dispute the square footage with a tape measure.
Common questions
What happens if my warehouse is smaller than the lease says?
Most industrial leases state that square footage is approximate and rent does not change if the actual size differs. In a multi-tenant building, a size error can affect your share of operating expenses, which is worth raising. Check the size before you sign rather than after.
Does the premises include the parking lot and truck yard?
In a single-tenant building it usually does, though owners sometimes carve out portions. In a multi-tenant park you typically get shared rights to common areas plus certain exclusive areas. The site plan exhibit and lease text should say which areas you control.
How is industrial square footage measured?
Industrial buildings are typically measured to the outside of the exterior walls under recognized industry standards, but different measurers can still reach different totals. Treat the marketed figure as a close approximation and focus on whether the building works for your operation.
General information about how industrial leases commonly work, not legal advice. Every lease is different: have a California real estate attorney review yours before you sign.