Hughes Marino Executive Managing Director Owen Rice, who has advised founder Glen Swain for 10 years across three Seattle concepts, guided the site selection and transaction.

A downtown Seattle space that once housed a 24-Hour Fitness is being reborn as something the Pacific Northwest has not seen before. Hughes Marino, the commercial real estate advisory firm that exclusively represents tenants and buyers, today announced that it advised fitness entrepreneur Glen Swain on securing and reimagining the home of Sanctuary, a first-of-its-kind luxury performance, recovery and social club opening April 1, 2027, in the Metropolitan Park North building at 1827 Yale Ave. in Seattle’s Denny Triangle neighborhood. The 45,000-square-foot members-only destination reflects a broader shift in commercial real estate, as next-generation wellness concepts move into space once occupied by big-box gyms.

The transformation reflects a change playing out across the fitness industry. As the traditional mid-tier gym is squeezed between low-cost chains and high-end concepts, some of the well-located real estate that older big-box clubs leave behind is being reclaimed by operators betting on wellness, recovery and longevity. Sanctuary is among the most ambitious examples yet in the Pacific Northwest.

“We are seeing prime real estate that used to belong to big-box gyms get reimagined for a different kind of member,” said Owen Rice, executive managing director at Hughes Marino. “Glen saw that shift early. This building gave him the scale and the downtown location to create something far more elevated than what stood here before, and watching that transformation take shape has been a genuinely rewarding project to be part of.”

A Decade of Trusted Advice

Rice has guided Swain’s real estate strategy for a decade, across the launch of Henry’s Gymnasium in Queen Anne in 2022, a second Henry’s in Capitol Hill in 2024 and now Sanctuary. That continuity gave Swain a partner who understood not only the numbers behind each transaction but the vision driving them.

“Owen has been in my corner for 10 years, since before the first Henry’s opened,” said Glen Swain, founder of Sanctuary. “He understands what I am trying to build better than almost anyone, and he knows this city. When it came time to find a home for Sanctuary, my most significant project to date, there was never a question about who I wanted guiding me. Hughes Marino helped me see the potential in this space long before anyone else could.”

Designed to Be Felt, Engineered to Perform

The project goes well beyond a renovation. Where the building once held a utilitarian fitness floor, Sanctuary is being crafted as a multi-sensory environment where architecture, lighting, natural materials and a carefully considered flow work together. Every sightline, texture and transition has been designed to feel sophisticated without being intimidating, closer to a luxury private club than a gym. The effect is meant to be felt the moment a member walks through the door.

Sanctuary’s check-in area welcomes members into the new 45,000-square-foot private performance, recovery and social club. Opening in spring 2027, the club is designed to create a luxurious environment that feels sophisticated without being intimidating, where fitness, recovery, longevity and community exist under one roof.

That beauty is matched by best-in-class technology. Sanctuary will house one of the Pacific Northwest’s largest collections of premium strength and cardio equipment and will be among the first clubs in the country to feature Peloton’s new commercial line. Dedicated studios for Pilates, yoga and boxing sit alongside an extensive recovery wing outfitted with cryotherapy, infrared and red-light therapy, contrast therapy and hydromassage. Resort-inspired water amenities, including a mineral pool, a Himalayan salt sauna and a eucalyptus steam room, round out an experience engineered for performance and restoration in equal measure.

Sanctuary’s dedicated Pilates studio will be one of several specialized fitness experiences available to members. The club will also feature dedicated yoga, boxing, Peloton, women’s-only fitness and specialty training studios.

That marriage of design and technology is also a business strategy. Thoughtfully crafted spaces tend to earn deeper loyalty and longer membership, turning a single visit into a reason to return and a gym into a place people genuinely want to be.

Sanctuary will feature one of the Pacific Northwest’s largest collections of premium strength and cardio equipment. The club integrates strength training, recovery, nervous system regulation and restorative experiences to help build resilience, improve focus and support lifelong health.

The Right Location

The Denny Triangle site was a deliberate choice. The 45,000-square-foot private investment in the heart of downtown is a vote of confidence at a moment when the city is working to draw people back. The location places Sanctuary within reach of the neighborhoods and major employers that anchor Seattle’s workforce, including the tech companies whose employees increasingly look to their gym as a place to find community and build their circle, and it sits close to Swain’s existing Henry’s locations, extending his footprint across the city.

Parking, often a friction point and an added cost for downtown members, was a priority in the transaction. Hughes Marino negotiated terms that allow Sanctuary to offer complimentary parking, a meaningful differentiator from other clubs competing for members in the area.

What Members Will Find

Inside, Sanctuary will bring together top-tier fitness, resort-inspired recovery and longevity services alongside social and coworking spaces designed as a true third place. The club will also feature an exclusive partnership with The Covery Health, introducing its first Covery Rx concept for physician-guided wellness. Full membership, amenity and founding member details are available directly from Sanctuary.

About Sanctuary

Sanctuary is the Puget Sound’s first private performance, recovery and social club, redefining the wellness experience through exceptional design, thoughtfully curated environments and a holistic approach to health and longevity. Opening in Seattle in 2027, Sanctuary was founded by fitness entrepreneur Glen Swain, who introduced Henry’s Gymnasium to Queen Anne in 2022 and Capitol Hill in 2024. Sanctuary represents his latest vision, a first-of-its-kind destination for individuals seeking sustainable performance, resilience and lifelong well-being.

Image credit: NAGELSport

The post Hughes Marino Advises on the Transformation of a Former Downtown Gym into Sanctuary, a First-of-Its-Kind Luxury Wellness and Longevity Club appeared first on Hughes Marino.

      

Related Stories

• Q3 2026 Seattle & Puget Sound Office Market Report: A Tenant’s Field Guide
• A Tenant’s Window Opens as Vacancy Climbs and Development Stalls
• Rethinking the Warehouse: How Embracing Automation and Robotics Can Lead to Meaningful Savings

 

If your company leases office space in the Puget Sound region (King, Pierce and Snohomish counties), you are in the strongest position tenants have held in a generation. About 25% of the region’s multi-tenant office space sits empty, and in the Seattle central business district (CBD), the figure is about 35%.

But the market has stopped falling. Leasing is at its best pace since 2021, sublease space has shrunk to about half its 2020 share, and almost nothing new is being built. The clearance sale is still on, but the racks are getting thinner. For business leaders, the question is no longer whether you have leverage. It is where you have it, and how long it will last.

II. Office Vacancy by Submarket: One Region, Very Different Deals

“Seattle office” is not one market. A company seeking 15,000 SF could face 35% vacancy in one neighborhood and 3% a short drive away, and its leasing strategy should change accordingly.

Maximum Leverage: 30%+

Seattle CBD, Pioneer Square/Waterfront, Belltown/Denny Regrade, Queen Anne/Magnolia and I-90 Corridor. Landlords are competing hard—expect aggressive concessions, generous TI and flexible terms.

Strong Leverage: 15-30%

Bellevue CBD, Lake Union, Ballard/U Dist, Suburban Bellevue and Renton/Tukwila. Ample options give tenants real room to drive rate, concessions and term.

Strategy Wins: Under 15%

Kirkland, Redmond, Edmonds/Lynnwood, Mill Creek/Woodinville, Capitol Hill/Central Dist, Northgate/N Seattle, S Seattle and Tacoma CBD. Fewer listings reward deep market intel and off-market access—our specialty.

III. Downtown Seattle Office: The Clearance Aisle

Downtown Seattle’s office vacancy rate is about 35%, among the highest in the region. Walk down Third Avenue and you can practically hear the empty floors. Some of the CBD’s best-known towers are more than half available, and 1111 Third is more than 80% available. Pioneer Square tells the same story with more brick: about 33% vacant, with The Jack entirely empty.

A handful of buildings, led by West8, Madison Centre and Rainier Square, are winning most of the big deals. Everyone else is competing hard, and it shows up in the offer: long free-rent periods, generous build-out money (tenant improvement allowances) and flexibility like termination and expansion rights. Premium sublease space is another quiet bargain for companies comfortable with a shorter term. And ownership matters. Plaza 600 recently traded for about $60 per square foot, and a landlord with that cost basis can price space aggressively. Just make sure any landlord can actually fund the improvements it promises.

IV. Where the New Demand is Landing: South Lake Union and Bellevue

AI and tech companies are carrying much of the region’s leasing, but they are concentrated in two places. In South Lake Union, Anthropic is growing to roughly 163,000 SF at Dexter Yard. In downtown Bellevue, Crusoe, Lambda, OpenAI, Uber and Databricks have all signed leases, and top Class A asking rents sit around $69 per square foot. If your company wants the same new, amenity-rich buildings these firms want, expect real competition and start early.

Even downtown Bellevue is about 24% vacant, though, and Meta and Bungie just put large blocks of sublease space on the market. A move-in-ready sublease in a Bellevue tower may be the best value on the Eastside. Step outside the core and it gets easier still: the I-90 Corridor is 42% vacant, and Bothell and Suburban Bellevue sit around 20%.

V. The South Sound: Renton and Tacoma

Renton (about 23% vacant) just landed the region’s biggest office lease of the year, with Providence Health taking two full buildings at the former Longacres campus. The rest of the market is split: older space is tight, while the newest towers are still close to 40% vacant. That makes Renton a rare chance to get new space near I-405 and SeaTac at a fraction of Bellevue pricing.

Tacoma’s downtown is steady and affordable, at about 14% vacant with rents near $30 per square foot. Its best buildings carry the most empty space, so tenants there should push for better improvements rather than lower rent.

VI. The Tight Suburbs: Kirkland, Northgate, Edmonds and Mill Creek

Here is the part of the market that rarely makes the headlines. Kirkland (9%), Northgate (8%), Edmonds/Lynnwood (8%) and Mill Creek/Woodinville (3%) are quietly running out of room, and nobody is building anything new. Kirkland rents rose about 4% over the past year. In all of Mill Creek/Woodinville, only about 43,000 SF is listed as available.

If your business is based in one of these markets, start 18 to 24 months before your lease expires, use your landlord’s desire to avoid a vacancy to lock in an early renewal and consider buying. In Mill Creek/Woodinville, buildings are trading near $300 per square foot, and owning can beat renting when there is nothing to rent.

VII. Office Lease Strategy: What Smart Tenants Are Doing Now

Most landlords would rather give you a year of free rent than lower the number on the lease, because the building’s value depends on the face rate. Once you understand that, the strategy gets clearer.

Compare the whole deal, not the rent. Free months, build-out money and flexibility can make two offers with the same asking rate differ by 20% or more in real cost.

Size build-out money to today’s prices. Construction costs rose about 9% over the past year. Ask for a turnkey build-out or an allowance based on a current contractor estimate.

Check that your landlord can pay. With interest rates high, some owners are stretched. Protect yourself with rent offset rights if promised improvement money does not appear.

Buy flexibility while it is cheap. Termination options, expansion rights and the ability to give back space cost landlords less in a soft market. Ask for them.

Lock in long-term value. If you plan to stay, capture today’s pricing for 10 years, with renewal options at fixed or capped rates.

VIII. The Bottom Line: Planning for 2027 and 2028 Lease Expirations

Only about 139,000 SF of speculative office space is under construction across the entire region, so today’s surplus is the last big supply of space this cycle. In downtown Seattle and much of the Eastside, you hold the cards. In Renton and Tacoma, the best deals are in the newest buildings. In the tight suburbs, the advantage goes to whoever starts first.

If your lease expires in 2027 or 2028, now is the time to start the conversation. The best concessions of this cycle are on the table today, and they will not stay there forever. Hughes Marino works for occupiers of space, not landlords, and our Seattle team can show you where your leverage is strongest.

Frequently Asked Questions

Market statistics provided by CoStar Group.

The post Q3 2026 Seattle & Puget Sound Office Market Report: A Tenant’s Field Guide appeared first on Hughes Marino.

      

Related Stories

• A Tenant’s Window Opens as Vacancy Climbs and Development Stalls
• Hughes Marino Advises on the Transformation of a Former Downtown Gym into Sanctuary, a First-of-Its-Kind Luxury Wellness and Longevity Club
• Rethinking the Warehouse: How Embracing Automation and Robotics Can Lead to Meaningful Savings

 

At the same time, the development pipeline that fed the last cycle has thinned dramatically. Inventory is still growing in the near term as projects already underway deliver, but with new construction starts down roughly 3M SF year over year, the supply coming after that has slowed to a trickle. That tension defines the market today. Conditions are soft now, but a shrinking supply of future space sets up a much tighter market once demand returns.

One Region, Very Different Submarkets

The regional average hides how uneven conditions have become. Vacancy has risen almost everywhere, but the pace and the pain are not evenly shared.

The softness is concentrated in the south. The Kent Valley, long the backbone of Seattle distribution, and the Southend around Tacoma and Fife carry the highest vacancy and the deepest concessions. Tacoma and Fife now sit near 15 percent vacant with availability approaching 19 percent, the widest gap in the region and a clear sign of how much space is being marketed ahead of actual move-outs. The Eastside has held up better, but it is not immune. Limited inventory has kept occupancy losses in Woodinville and the broader Eastside modest, and asking rents there remain the highest in the region. Even so, Woodinville vacancy has climbed from 5.5 percent at year-end 2025 to 9.6 percent, the largest increase of any submarket we track. Farther north, Mukilteo and the Snohomish County submarkets are the tightest of all, with vacancy and availability both at 5.4 percent.

Measuring the market through availability rather than vacancy, the way a tenant actually experiences it, the gap between the two is a useful early signal. Where availability sits well above vacancy, as it does most sharply in Tacoma and Fife, more space is on the way even before it shows up as empty.

Asking Rent Growth Has Cooled, but Effective Rents Keep Falling

Asking rent growth across the region has cooled to roughly 3 to 5 percent year over year, down from annual gains of 6 to 8 percent in 2022 and 2023. The more important movement is happening beneath the asking rate.

To secure occupancy in a market this soft, landlords are layering on free rent, larger tenant improvement allowances and other concessions. Effective rents, what a tenant actually pays over the life of a lease, continue to decline even as the quoted number edges up. Class A product is holding up better than older space, but concessions are on the table across the board.

Muted Demand, Softer Cargo and Big Blocks Returning

Large block leasing activity remains muted, and what is happening is driven mostly by renewals rather than expansion. Net absorption has turned negative across much of the region over the past year, with the steepest occupancy losses in the Kent Valley as large distributors and freight users give back space. The south did show early signs of stabilizing in the third quarter, with positive absorption in both the Kent Valley and the Southend, enough to turn the Southend’s trailing 12-month total slightly positive.

Those departures matter. The big, well-located blocks these users leave behind are among the most valuable in the market, and they are now available to tenants who could not have touched them a few years ago. Underlying demand is being held back by forces outside the region’s control. Ongoing tariff uncertainty and softer cargo volumes through the Northwest Seaport Alliance continue to weigh on warehouse requirements, and core cargo activity remains down.

Aerospace and Defense Step into the Big Blocks

The clearest signal of where the next wave of demand is coming from showed up late in the third quarter, when several of the quarter’s most significant new leases went to aerospace, defense and space users. Cowboy Space leased 291,035 SF at 7650 S. 228th St. in Kent, where it will convert the building to manufacturing for space and rocket hardware and bring about 300 jobs. In Everett, Amazon took 91,000 SF for its Leo satellite division. Other significant large-block deals have also been completed in SeaTac.

These deals are significant beyond their size. Advanced manufacturing and aerospace-related users are driving some of the most active requirements in the market, with demand for blocks ranging from 300,000 to 700,000 SF improving considerably. The Cowboy Space lease is a good example of this shift, taking a second-generation Kent Valley distribution facility and converting it to long-term manufacturing use, effectively removing another large block of space from the market.

For tenants, the takeaway is straightforward. Many of the large, well-located facilities that provide leverage in today’s market are also being targeted by advanced manufacturing and aerospace users. These groups are competing for many of the same building features, including heavy power, high clear heights and sufficient yard space for secure operations. While tenants still have meaningful leverage today, those with large-format requirements should not assume the same selection of quality options will be available heading into 2027.

A National Landlord Confirms What We See Locally

The softness is not just a local read. On recent earnings calls, Prologis, the largest industrial landlord in the country, has pointed to Seattle as one of its softer markets even as it reported exceptionally strong national results. When the biggest owner in the sector names your market among its softest, it reinforces what our team is negotiating firsthand every day. Seattle is one of the most tenant-friendly industrial markets in the country right now.

What This Means for Tenants

In most of the country, leasing activity is starting to pick up. As it does, landlords regain the upper hand, and the free rent and other concessions tenants can win today begin to disappear. Seattle is expected to stay behind that curve. The region has more empty space to work through, and with port volumes soft and tariffs still a drag, its high vacancy and tenant-friendly deal terms should hold into 2027.

For tenants, that delay is the opportunity. While landlord leverage stays limited, now is the window to pursue early lease restructures, renewals or relocations and to lock in terms that will be far harder to win once space starts filling again and landlords get their pricing power back.

That window will not stay open forever. Very little new construction is starting today, and aerospace and defense users are already absorbing some of the largest blocks. A short supply of available buildings is exactly what pushes vacancy back down and hands leverage to landlords. The tenants who act now, while options are plentiful and concessions are generous, will be in a far stronger position than those who wait.

The costly mistake is to navigate this market alone or through the landlord’s representative. Understanding the full range of options, and what can be structured and negotiated in today’s conditions, is where independent tenant representation earns its value.

Market statistics provided by CoStar Group.

The post A Tenant’s Window Opens as Vacancy Climbs and Development Stalls appeared first on Hughes Marino.

      

Related Stories

• Q3 2026 Seattle & Puget Sound Office Market Report: A Tenant’s Field Guide
• Hughes Marino Advises on the Transformation of a Former Downtown Gym into Sanctuary, a First-of-Its-Kind Luxury Wellness and Longevity Club
• Rethinking the Warehouse: How Embracing Automation and Robotics Can Lead to Meaningful Savings

 

By Alex Musetti, Will Tober & Mike Paleo

For as long as most of us can remember, the industrial warehouse has followed a reliable formula. Racks, forklifts, aisle ways, and a floor plan built to move product efficiently from dock to shelf and back again. It’s a model that has served companies well, and for good reason. It works.

But a new set of tools is emerging that is giving some companies a chance to rethink what’s possible inside their four walls. Robotics and automation technology, long proven in high-density distribution markets across Asia, is now arriving in North America at scale. For industrial tenants, it’s worth understanding what it could mean for your business in the near future and beyond.

We recently spoke with ThruPut Partners co-founders Brian Hudock and Kevin Hume, supply chain consultants with decades of hands-on experience helping companies implement warehouse technology, and provided the Hughes Marino perspective on what these technologies actually do, who they make sense for, and what industrial tenants might want to consider as the landscape evolves.

The Traditional Warehouse Model

Q: Warehouse design has followed a pretty consistent model for a long time. Can you walk us through how it typically works?

ThruPut: The traditional warehouse model is built around forklifts and the aisle ways those forklifts need to move through. Your floor plan is essentially shaped by your equipment. You have racks for storage, aisleways for access and a workforce to operate it all. When volume grows, you add labor and space. It’s a logical, time-tested system, and the vast majority of industrial operations around the world run on some version of it. Standard pallet rack configurations, for example, require aisle ways anywhere from 9 to 15 feet wide depending on the equipment, and lift trucks typically max out at 28 to 40 feet in height. That geometry has defined how warehouses are laid out for generations. What we’re seeing now is that a new category of technology is giving companies options they didn’t have before, not to replace what works, but to potentially do more with the space they have.

What Robotics Can Do for Your Space

Q: Can you give a concrete example of how robotics changed the space picture for one of your clients?

ThruPut: We worked with a client who, based on a traditional space analysis, determined they needed 250,000 SF. When we modeled their operation using an autonomous robotic storage and retrieval system, that number came down to 160,000 SF. Same inventory, same throughput, 90,000 SF less. At current market rates, that kind of difference can translate to millions of dollars over the life of a lease, on top of the labor and insurance savings that often come along with it. That said, results vary depending on the operation. The point isn’t that everyone will see those numbers. It’s that the analysis is worth doing.

Q: How does robotics actually create those kinds of space efficiencies?

ThruPut: In a conventional warehouse, a significant portion of the floor plan is dedicated to aisle ways, space that product never actually touches. It exists purely for equipment access. Autonomous robotic systems actually work within the racking structure itself, which means those wide aisle ways are no longer required. The storage footprint can compress and build vertically in ways that were not practical before. Systems like AutoStore, for example, run robots across an aluminum grid on top of a dense storage cube, delivering bins directly to operators at workstations. There are no walking aisles and no forklift lanes, and storage density can increase up to 400% compared to conventional layouts because you’re building up and in rather than out. For operations that work primarily with full pallets rather than bins, four-way pallet shuttle systems operate on a similar principle, with autonomous robots moving pallets in four directions within the racking structure itself, handling up to around 3,300 pounds and running full warehouse height.

^{Photo credit: Mecalux}

Beyond the footprint, forklift-related injuries are one of the most common sources of workplace incidents in industrial facilities, so reducing or eliminating that equipment can have a meaningful impact on insurance costs. These systems also operate around the clock without the variability that comes with shift changes and staffing gaps.

Q: What does the automation landscape actually look like today for companies that are starting to explore this?

ThruPut: It’s broader than most people realize, and it’s useful to think of it in three buckets. The first is proven automation that many companies already have in some form: warehouse management systems, conveyors, sorters, barcode scanning and automated packing equipment. The second is what we would call current adoption technology, things that are being actively deployed right now: autonomous mobile robots for picking and transport, automated shuttle systems and warehouse execution systems that coordinate it all. The third is emerging technology: robotic arms for depalletizing, fully autonomous lift trucks and AI-driven inventory management. Most companies aren’t starting at the cutting edge, and they don’t need to be. The right starting point depends entirely on where your operation is today and where your biggest pressure points are, whether that’s labor, space, accuracy or throughput.

Q: What does a good candidate for warehouse automation actually look like?

ThruPut: The honest answer is that it depends, and figuring that out is exactly where we start. These systems are a strong fit for certain operation types and less so for others. Companies that are primarily pallet-driven, operating in high-cost real estate markets or dealing with significant labor challenges tend to see the strongest case. Seasonal operations that rely heavily on forklift flexibility may find that the traditional model still serves them better. And automation doesn’t have to mean a full robotic overhaul. There are incremental steps, better warehouse management systems, smarter layouts, targeted automation in specific areas, that can add real value without a major capital commitment. Our job is always to start with the operation and work backwards to the technology, never the other way around.

The Hughes Marino Perspective

Q: How has your approach to advising industrial clients evolved as these technologies have become more prominent?

Hughes Marino: We’re asking more questions than we used to, and earlier in the process. It used to be fairly straightforward: a client comes in with a square footage number and we go find it. We still do that, but now we want to understand the operation behind the number before we take it at face value. How is the warehouse currently set up? What equipment are they running? Have they thought about automation at all? A client who is running a forklift-dependent operation has a very different space profile than one who is open to a robotic system, and the square footage they need can look dramatically different as a result. We’ve had clients come in with one number in mind and end up in a meaningfully different and better situation once we dug into the details. Other times the number they came in with was exactly right. Either way, the conversation is richer for asking. We also think about it differently now in terms of how we measure space. The industry has long talked about square footage, but the more relevant conversation for an automated warehouse is often cubic footage, how much volume can you actually store and move within a given footprint, not just how many square feet it covers.

Q: Are there building specifications you now factor into your search that you might not have prioritized a few years ago?

Hughes Marino: Definitely. Things like floor flatness, ceiling clear height and power capacity used to be secondary considerations for many industrial clients. Now we’re asking about them upfront, because those specs determine what technology a building can support down the road. Certain robotic systems require very precise floor flatness tolerances that older buildings simply cannot meet. Higher clear heights allow for the kind of vertical storage density that makes these systems work. And the electrical load requirements for automated systems are substantially higher than a conventional forklift operation, so a building’s power infrastructure matters in a way it didn’t before. A client who’s open to automation, or who might want that option in year five of a 10-year lease, needs a building that can accommodate it. If we discover that mismatch after a lease is signed, the options get expensive fast.

Q: You have worked with ThruPut Partners on industrial client engagements. What does that look like in practice?

Hughes Marino: We’ve brought ThruPut in on the front end of industrial client work to take a closer look at the operational picture alongside our real estate analysis. They help us understand what a client’s space needs actually look like once you account for how their operation works and what technology options might apply. That directly shapes what we are looking for in a building: the square footage, the specs, the market. The reason we do it early is that discovering a mismatch between a building and an operation after a lease is signed is an expensive problem. Retrofitting mid-lease is costly and disruptive, and some building limitations simply cannot be worked around. Getting that picture clear on the front end is always the better path.

Q: What do companies most often overlook when evaluating industrial space?

Hughes Marino: Two things come up consistently. The first is not accounting for where their operation is heading, not just where it is today. The second is underestimating how much the building itself matters. It’s bigger than most people realize, and it shows up in more ways than just rent. If you’ve committed to more space than you needed, that cost is sitting on your books every month for the life of the lease. The difference between a right-sized space and an oversized one adds up quickly. But beyond that, a building that cannot support the technology your operation eventually needs becomes a real constraint. You’re either stuck working around it or facing a costly retrofit. And there’s an opportunity cost that’s harder to quantify, but just as real: a company locked into the wrong space for 10 years isn’t well positioned to take advantage of what’s becoming available in the market right now. That’s ultimately why we invest so much in the front-end process. Getting it right before you sign is almost always less expensive than solving it after.

Q: Why should industrial tenants be paying attention to robotics and warehouse technology right now?

Hughes Marino: Because the window to get ahead of it is open right now, and it won’t be forever. Robotics and warehouse technology is something that’s going to become increasingly relevant in the next five to 10 years. These trends have already played out in high-density markets across Asia, where space constraints forced a level of innovation that’s now making its way to the United States. Most industrial companies don’t have deep warehouse technology expertise in house, and they shouldn’t necessarily have to. Being able to introduce this conversation early, before a lease is signed or a major real estate decision is made, makes a real difference. We aren’t in the business of telling clients what they need to do. We are in the business of making sure they have the full picture when they decide.

The post Rethinking the Warehouse: How Embracing Automation and Robotics Can Lead to Meaningful Savings appeared first on Hughes Marino.

      

Related Stories

• Hughes Marino Advises on the Transformation of a Former Downtown Gym into Sanctuary, a First-of-Its-Kind Luxury Wellness and Longevity Club
• Q3 2026 Seattle & Puget Sound Office Market Report: A Tenant’s Field Guide
• A Tenant’s Window Opens as Vacancy Climbs and Development Stalls

 

Alport syndrome is a rare genetic disease that can cause kidney failure, hearing loss, ophthalmological conditions and pregnancy complications. Differences in genetic type and variant, as well as other factors affect each patient’s prognosis and outcomes.

A San Diego native, Mack advises tenant and buyer clients from our San Diego headquarters. He’s especially at home working with San Diego’s life science and biotech community, where he understands the language, the timelines and the pressures his clients face.

As a living kidney donor and rare disease awareness advocate, Mack brings his unique personal and professional perspective to his clients, seeing the work as part of something larger. “By being involved with ASF, which engages with institutions and the life science industry to build a pharmaceutical pipeline for this rare disease, I’ve gained a deeper understanding of the critical value and process of medical research and the need for diagnostic tools, and drug and device development that make a difference in people’s lives. It has also given me a better appreciation for the needs of the biotech community.” Mack notes, “Working with life science clients, I get to combine my personal and professional interests. Real estate can be a vehicle to help other people.” For him, giving generously to others is also a deeply held personal value that began at home.

A Family’s Search for Answers

From childhood, Mack’s mother, Lisa, was diagnosed with kidney disease. However, like many people with Alport syndrome, she was repeatedly misdiagnosed with the wrong cause of her symptoms. Lisa started a family not knowing her kidney disease was genetic and could be passed on to her children. When Mack’s younger brother began experiencing significant hearing loss at age 11, Lisa’s own research led her to suspect Alport syndrome, secure testing, and gain an accurate diagnosis for herself and Mack’s brother. It was a serious diagnosis that shifted the family’s focus and priorities. Genetic testing also confirmed that Mack had not inherited the disease.

^{Mack’s mother, Lisa, Executive Director of Alport Syndrome Foundation, at a scientific workshop with the FDA in December 2025.}

Lisa turned to Alport Syndrome Foundation for education and support. She began volunteering for the organization and raising funds to organize patient meetings across the country. Mack remembers attending their first Alport Connect meeting. They met others facing the same diagnosis and challenges, medical experts and researchers, renal dietitians, kidney transplant specialists and more. They had found a supportive community and felt much less alone.

When It Became Real

Mack grew up knowing that if his brother ever needed a kidney, he wanted to be the donor. In the fall of 2021, the family was driving his brother, then 19, to start college in Colorado when routine lab work revealed he was facing renal failure. Within two months, he was on dialysis.

^{Mack, Grant and their mother, Lisa, following the brothers’ transplant surgery in December 2021.}

Making use of ASF’s educational resources, learning from the experiences of other families, building relationships with medical experts and understanding what steps to take, Mack’s family was ready. After several days of testing, Mack was confirmed as a match and cleared to donate. On December 22, 2021, Mack and his brother both underwent surgery with Mack as the living kidney donor and his brother as the recipient. The surgery went smoothly, and today his brother is living a fuller, more normal life. “It happened so fast, and it was scary,” Mack says, “but we had such great support, education and access to knowledgeable experts through ASF.”

Turning Experience Into a Mission

For the family, the transplant didn’t close the chapter—it deepened their commitment to the community that had carried them through. With a background in non-profit management, Mack’s mother took on the Executive Director role for the organization. In their volunteer roles, Mack and his brother help organize events and volunteer across the country alongside other young adults affected by Alport syndrome. A cornerstone of that work is the annual Alport Connect gathering, which ASF hosts in a different city each year. The organization helps cover travel and lodging costs, making it easier for families to attend who otherwise would not have the resources. More than 170 patients attended the 2026 event in Philadelphia for education and connection. It also drew representatives from seven pharmaceutical and biotech companies now working with ASF to learn about patient experiences and launch clinical trials.

^{Mack’s mother, Lisa, speaking at Alport Connect. Mack and Grant volunteer at the event each year.}

One of Mack’s roles at ASF is being the mentor he wishes he’d had when he was anticipating the kidney transplant donor procedure. “My mind was a storm the night before my surgery, and I didn’t have anyone who had been through it to talk to,” he says. Through ASF, he speaks with siblings, parents and friends weighing whether to become living donors, walking them through what to expect. “Now, when I help ease someone else’s mind, that means everything.” His brother speaks with younger patients navigating life with the disease and those adjusting to post-transplant life.

Beyond their own story, the family’s broader mission is education and awareness. Alport syndrome is often misdiagnosed, overlooked and undertreated. The Foundation works to educate patients and physicians, advocates for genetic testing that can diagnose the disease early, invests in research and patient data collection that is helping shape and advance clinical trials and has established a Public-Private Partnership with the FDA to advance exploration of new treatments or cure.

Mack embodies what it means to give to others, which makes life and work more meaningful. We are grateful for his example, both inside and outside of the office, and proud to have Mack as part of our Hughes Marino team. To learn more about Mack’s involvement in ASF and the work of Alport Syndrome Foundation, visit www.alportsyndrome.org.

The post Generously Giving to Others: How Vice President Mack Bonebrake and His Family Are Raising Awareness for Alport Syndrome appeared first on Hughes Marino.

      

Related Stories

• Hughes Marino Advises on the Transformation of a Former Downtown Gym into Sanctuary, a First-of-Its-Kind Luxury Wellness and Longevity Club
• Q3 2026 Seattle & Puget Sound Office Market Report: A Tenant’s Field Guide
• A Tenant’s Window Opens as Vacancy Climbs and Development Stalls

 

This guide identifies 15 of the most consequential commercial lease red flags that Hughes Marino’s tenant representation team encounters most frequently in commercial lease negotiations. Each represents a clause that is routinely included in landlord-drafted leases, routinely accepted by tenants without scrutiny, and routinely correctable, if you know what you’re looking for and have the right advisor in your corner. We’ve also included specific lease negotiation counter-terms for the five highest-risk clauses, so you walk into every negotiation with a clear target, not just a list of problems. Whether you’re reviewing an office lease, laboratory space, an industrial facility or any other commercial property, these are the provisions that deserve your closest attention.

Hughes Marino’s Commitment to Transparent Tenant Representation

Hughes Marino represents tenants and occupiers, not landlords. That singular focus matters most at the lease negotiation stage, because the advisor who reviews your commercial lease brings either a tenant’s perspective or a landlord’s perspective to every clause. A large brokerage firm that also manages properties, handles landlord leasing and sells investment real estate has structural reasons to preserve landlord-friendly language that a pure tenant representative does not.

Our team has reviewed tens of thousands of commercial leases for our clients around the globe. The 15 most common red flags to watch out for below are not theoretical; they are the clauses we renegotiate most often, the provisions that cost our clients the most when they go unchallenged, and the language that landlords’ attorneys count on tenants to accept without question. While the below topics are most common, there are often 100+ idiosyncratic issues to negotiate in order to properly protect tenants. If you have an existing lease and are not certain what it actually says on any of these points, a lease audit is the most efficient first step. If you are approaching a renewal or a new lease, the time to identify and address these provisions is now, before any terms are agreed to verbally and before you’re negotiating from a position of reduced leverage.

1. Financial Red Flags: Personal Liability, Rent Structures and Escalations

The financial provisions of a commercial lease determine not just what you pay, but who bears the risk when business conditions change. These are the clauses most likely to produce catastrophic outcomes for business owners who didn’t fully read what they signed.

Red Flag #1: The Unlimited Personal Guarantee

A personal guarantee requires an owner or officer to back the company’s lease obligations with their personal assets. In a landlord-drafted lease, the guarantee is typically unlimited, covering the full financial exposure of the entire lease term, with no sunset or mitigation provision. That means if your business closes in year three of a ten-year lease, you remain personally liable for seven more years of rent obligations. The negotiated alternative is a burn-off guarantee: personal liability that reduces or expires after a defined period of consistent on-time rent payment (typically 12 to 24 months), and is capped at a fixed dollar amount (typically 6 to 12 months of base rent) rather than the full remaining term. Landlords who want creditworthy tenants will accept this. The ones who refuse to negotiate personal guarantee terms are showing you something about how they expect the tenancy to go. Your advisor plays a substantial role in how this provision gets negotiated.

Red Flag #2: A Fixed Rent Schedule with No Renewal Market Reset Mechanism

Commercial leases, especially long ones, should include a mechanism for resetting rent to market if conditions shift significantly. A lease that locks in today’s rent on a fixed escalation schedule for 10 or 15 years means you could be paying substantially above-market rates by year eight with no contractual remedy. Push for a fair market value rent reset option at renewal, defined by a third-party appraisal process with binding “baseball” arbitration if the parties disagree. This is standard in well-negotiated leases and something most landlords will accept when pressed.

Red Flag #3: Uncapped Annual Rent Escalations

Most commercial leases include annual rent increases tied to either a fixed percentage (typically 3%) or the Consumer Price Index. The CPI-linked version is the more dangerous of the two, because CPI has no ceiling. In a high-inflation environment, a CPI-based escalation clause can push rent increases above 8 to 10% in a single year with no protection for the tenant. Negotiate a cap on annual escalations, typically 3 to 4% per year regardless of CPI movement, as a hard ceiling on your year-over-year rent exposure.

2. Expense Exposure Red Flags: CAM, Gross-Ups and Capital Pass-Throughs

For tenants in NNN (triple-net) or modified-gross lease structures, operating expense provisions are where the financial exposure often hides. The base rent may be competitive, but the total occupancy cost can be dramatically higher once operating expense pass-throughs are factored in, especially in aging buildings with deferred maintenance or in markets where landlords routinely push the boundaries of what expenses can legitimately be passed through.

Red Flag #4: Uncapped CAM and Operating Expense Pass-Throughs

Common Area Maintenance (CAM) and operating expense clauses in NNN leases can pass through virtually every building operating cost to tenants: property taxes, insurance, maintenance, management fees, utilities and more. Without a cap, your occupancy cost is unpredictable from year to year. Caps aren’t standard for most tenants, but they are negotiable: push for a year-over-year CAM increase cap of 3 to 5% on controllable expenses (those within the landlord’s ability to manage). This doesn’t limit total operating costs; it limits how fast they can grow in any given year, which is what matters for your budget certainty.

Red Flag #5: Gross-Up Provisions

When a building is partially occupied, the landlord’s actual operating expenses are lower than they would be at full occupancy. A gross-up provision allows the landlord to calculate what expenses would have been at 95% or 100% occupancy, and charge tenants their pro-rata share of what could be an inflated number – rather than the actual number. In a soft market with significant vacancies, this can result in tenants paying thousands of dollars per year in phantom expenses the landlord never actually incurred. It is important to understand whether a gross-up provision can save or cost you money, as it depends on many factors.

Red Flag #6: Capital Expenditure Pass-Throughs

Routine maintenance is a legitimate operating expense that tenants in NNN leases should expect to share. Major capital expenditures shouldn’t be a tenant’s responsibility, but often are. A landlord-drafted lease will often attempt to pass through the cost of HVAC system replacement, roof replacement, parking lot resurfacing, mold mitigation or elevator modernization as operating expenses, amortized over time, but still billed to current tenants who will never occupy the building long enough to benefit from the improvement. Negotiate explicit exclusions for capital expenditures exceeding a defined dollar threshold (typically $10,000 to $25,000 per occurrence) from the operating expenses you are responsible for as a tenant.

3. Control and Flexibility Red Flags: Relocation, Exclusivity and SNDA

Some of the most consequential lease provisions are not about what you pay; they’re about the security of your right to occupy the space you’ve invested in, and whether you have the operational flexibility your business actually needs. These clauses are frequently buried in the middle of long leases and passed over without full consideration.

Red Flag #7: Landlord’s Right to Relocate Your Business

A relocation clause gives the landlord the right to move your business to a different suite or floor within the building, typically with 30 to 90 days’ notice. This provision exists primarily to give the landlord flexibility to accommodate larger tenants or reconfigure floors. For the tenant, it can mean an unplanned move mid-lease with real cost implications: new signage, new office materials, client notification, IT reconfiguration and potential damage to carefully cultivated adjacency relationships. The solution is to negotiate for the relocation clause to be removed entirely, or conditioned on your written consent plus full reimbursement of all documented relocation costs.

Red Flag #8: Exclusivity Clauses with Too Many Carve-Outs

If your business depends on being the only provider of your product or service category in a building or shopping center, an exclusivity clause is essential. The problem is that most landlord-drafted exclusivity provisions are riddled with exceptions: existing tenants and their renewals are excluded, franchises are excluded, incidental sales are excluded and online or delivery operations may be excluded entirely. Read the exclusivity clause carefully and test every carve-out against real scenarios. A competitor who secures space in your building under the “existing tenant renewal” exception is just as damaging as one who signs a new lease.

Red Flag #9: No Non-Disturbance Agreement (SNDA)

A Subordination, Non-Disturbance and Attornment (SNDA) agreement does three things: it confirms your lease is subordinate to the landlord’s mortgage, it protects your right to remain in occupancy if the lender forecloses, and it commits you to recognize a new owner as your landlord. The critical piece for tenants is the non-disturbance commitment: the lender’s agreement that if they take title to the building, your lease will remain in force. Without it, a lender who forecloses can potentially terminate your tenancy even if you are current on rent. Require an executed SNDA from the existing lender before you take possession, and require that future financing be similarly conditioned on non-disturbance protection for your tenancy.

4. Exit and Transfer Red Flags: Subleases, Demolition and Holdover

Business conditions change. Companies grow, contract, restructure, merge and occasionally fail. A commercial lease that was appropriate for your business on day one may become a significant liability if it doesn’t allow you the flexibility to adapt your space commitment when circumstances shift. The clauses in this category determine whether your lease is a manageable obligation or a trap.

Red Flag #10: Restrictive Sublease and Assignment Provisions

Most commercial leases require landlord consent before you can sublease your space to another party or assign your lease in connection with a business sale or merger. That consent provision is standard, but the conditions under which it can be withheld, and the economic terms attached to it, vary enormously. Landlord-drafted leases typically allow the landlord to recapture the space if you want to sublease (taking the space back and re-leasing it at market), share in any sublease profit above your base rent, or withhold consent with minimal justification. Push for consent that cannot be unreasonably withheld, no recapture right and no profit sharing on sublease premium, especially for subleases covering less than your full footprint.

Red Flag #11: The Demolition or Recapture Clause

A demolition clause (sometimes called a redevelopment or recapture clause) gives the landlord the right to terminate your lease early if they decide to demolish, substantially renovate or redevelop the building. The notice period is typically 6 to 12 months, enough time to create serious disruption but rarely enough to find, negotiate, build out and occupy a comparable space without gaps. This clause is particularly dangerous for tenants with significant build-out investments, because all of that investment is lost when the landlord exercises the right. If you cannot get the clause removed, insist on a minimum notice period of 18 to 24 months, full reimbursement of unamortized tenant improvement allowances and moving costs, and a right of first refusal on any comparable space in the redeveloped property.

Red Flag #12: Extreme Holdover Rent Penalties

A holdover clause governs what happens if you remain in your space beyond the lease expiration date without executing a renewal or new lease. Landlord-drafted holdover provisions often set the holdover rent at 150 to 200% of the then-current base rent, payable month-to-month, plus the landlord’s right to recover consequential damages, meaning if another tenant wanted the space and couldn’t get it because you held over, the landlord can sue you for that lost deal. The more reasonable standard, which experienced tenant advisors negotiate routinely, is 100 to 125% of base rent for a defined short period (60 to 90 days), with consequential damages limited to situations where the landlord has an executed lease with an incoming tenant.

5. Structural Protection Red Flags: Delivery Condition, Repairs and Renewal Options

The final category of commercial lease red flags relates to the physical condition of the space you’re taking, the obligations you’re assuming for its maintenance, and the mechanism by which your lease continues or ends. These provisions are often dismissed as “boilerplate,” which is precisely why landlords’ attorneys leave them in the most landlord-favorable form possible.

Red Flag #13: “As-Is” Delivery with No Defined Condition Standard

An “as-is” delivery clause means you accept the space in its current condition, with no representations by the landlord about its fitness for use, compliance with applicable codes or the condition of building systems. In a space that has recently been vacated, “as-is” can hide deferred HVAC maintenance, ADA compliance deficiencies, code violations, environmental conditions or simply poor cosmetic conditions that you will be required to bring up to standard at your expense. Before accepting any as-is delivery, negotiate a landlord warranty that the building systems (HVAC, plumbing, electrical and life safety) will be in good working order on the delivery date, for a defined period after you take possession, and require that the landlord bring the premises and base building into compliance with applicable codes, including the ADA, at the landlord’s cost. Do not accept as-is delivery blindly.

Red Flag #14: Tenant Responsibility for Structural Repairs and Building Systems

In a well-balanced commercial lease, the landlord retains responsibility for the building structure (roof, foundation, exterior walls) and the major building systems (HVAC, plumbing, electrical), while the tenant is responsible for their own interior improvements. Landlord-drafted leases sometimes attempt to shift HVAC maintenance, repair and even replacement obligations to the tenant, particularly for units that are “dedicated” to the tenant’s suite. Over a long lease term, HVAC system replacement alone can cost $20,000 to $50,000 or more per unit. Negotiate to clearly delineate landlord vs. tenant maintenance obligations in writing, with major systems (HVAC, plumbing, electrical) remaining the landlord’s responsibility for repair and replacement, and tenant obligated only for routine maintenance.

Red Flag #15: Missed Renewal Option Deadlines

Most commercial leases don’t renew automatically. Instead, renewal is a tenant option that must be exercised by written notice within a specified window, often 6 to 12 months before expiration. Miss that deadline and the option is typically lost, leaving you to negotiate a renewal with little leverage or to relocate on a compressed timeline. Option deadlines are often buried in the lease body rather than highlighted in any summary. Calendar every option and notice deadline from day one of your lease, negotiate a clearly defined exercise procedure, and ask for a provision requiring the landlord to notify you before the option lapses. Most importantly, don’t wait for the deadline: begin evaluating your renewal and alternatives 18 to 24 months before expiration, while you still have time and leverage.

Quick Reference: All 15 Commercial Lease Red Flags at a Glance

The following table summarizes all 15 commercial lease red flags, the specific clause name to look for in your commercial lease agreement, and the core risk each poses to your business if left unaddressed.

What to Negotiate Instead: Counter-Terms for the 5 Highest-Risk Clauses

Identifying a red flag without knowing what to push for is only half the job. The following table shows the specific counter-language that experienced tenant advisors negotiate as standard in each of the five most consequential clauses.

Frequently Asked Questions

The post Commercial Lease Red Flags: 15 Terms to Watch Before You Sign appeared first on Hughes Marino.

      

Related Stories

• Hughes Marino Advises on the Transformation of a Former Downtown Gym into Sanctuary, a First-of-Its-Kind Luxury Wellness and Longevity Club
• Q3 2026 Seattle & Puget Sound Office Market Report: A Tenant’s Field Guide
• A Tenant’s Window Opens as Vacancy Climbs and Development Stalls

 

Commercial leases are drafted by landlord attorneys and optimized for the landlord’s interests. Every provision that is left vague, every right that is not explicitly granted and every deadline that is not calendared works in the landlord’s favor by default. This guide walks through the five steps of leasing your first office, from understanding what you’re actually signing to knowing which terms to lock down in the LOI before you commit, so you go into the process with a clear picture of what you’re agreeing to and what to ask for.

Step 1: Understand the Different Types of Office Leases

The first thing to understand about leasing office space is that the monthly rent quoted to you is not necessarily your total monthly cost. The relationship between quoted rent and actual occupancy cost depends on the type of lease structure, and getting this wrong is one of the most common and expensive mistakes first-time tenants make when comparing spaces. There are four main types of office leases, each with a different relationship between the quoted rent and your total cost:

Most first-time office tenants will encounter a full-service gross (FSG) lease structure, which is the most straightforward for budget planning. Your monthly rent covers base rent plus operating expenses up to the expense stop. The important caveat: FSG leases typically include an expense stop, set at the landlord’s actual operating expenses in the base year, and any increase in operating expenses above that stop gets passed through to you on a pro-rata basis. In a year with a significant property tax reassessment or major insurance increase, this can add meaningful cost above your quoted rent.

Before signing any lease, have a tenant advisor model your total occupancy cost, not just the quoted rent, so you’re comparing spaces on an apples-to-apples basis. Two spaces at the same quoted rent per square foot can have very different actual costs depending on lease structure, expense stop and the building’s historical operating cost track record.

Step 2: Complete a Needs Assessment

The single most effective way to avoid overpaying for office space is to know what you actually need before you walk into a single space. Most first-time tenants approach the search with a rough headcount and a vague sense of what feels right. Landlords and their brokers are skilled at showing you spaces that feel just large enough to justify the asking rent, and at nudging you toward more square footage than you need.

How Much Space Do You Need?

Check out our Office Space Calculator to help you plan your future workspace. But keep in mind, it isn’t only about the square footage. There are many factors that go into determining what is right for your company now and looking ahead. Here is our resource on Needs Assessments and why they are a valuable step in the process.

Understand Usable vs. Rentable Square Footage

Office space is quoted in rentable square feet (RSF), which includes your usable square feet (the space you actually occupy) plus your proportionate share of common areas: lobbies, hallways, restrooms and mechanical spaces. The percentage by which RSF exceeds usable SF is called the load factor or add-on factor, and it typically ranges from 10% to 25% in multi-tenant office buildings. A space quoted at 3,000 RSF with a 20% load factor gives you approximately 2,500 usable square feet. Higher load factors mean less actual usable space per dollar of rent.

Building Class

Class A buildings command premium rents and typically offer the best amenities, building systems and location quality. Class B buildings offer a middle ground, often well-maintained, slightly older or less amenity-rich, with lower rents. Class C buildings are the most value-oriented but require careful evaluation of building systems, maintenance standards and the quality of ownership. For a first lease, be honest about what your business needs vs. what impresses, as clients generally care less about building prestige than founders do.

Lease Term

Landlords generally prefer 5- to 10-year terms for office space. Shorter terms are available but typically come with less favorable economics: lower TI allowance, less free rent, higher per-SF rent. First-time tenants should think carefully about a term that balances the economic benefit of a longer commitment against the flexibility risk of locking in for a period longer than their business visibility.

Parking & Location

Define your parking requirement (spaces per 1,000 SF leased is the standard metric) and your location criteria before starting the search. These are significantly harder to negotiate after you’ve fallen in love with a space than before you’ve seen anything. Note that parking charges are in addition to rent – and very rarely included.

Step 3: Work With a Tenant Rep Broker at No Cost to You

One of the most persistent misconceptions among first-time commercial tenants is that working with a tenant representative broker will cost them money. It will not. The landlord pays both brokers, the landlord’s broker and the tenant’s broker, out of a leasing commission that is built into the economics of every deal. If you do not bring your own broker, the landlord’s broker typically collects the full commission. You do not save money by going unrepresented; you simply allow the landlord’s representative to collect both sides of the commission while representing the landlord’s interests.

What does a tenant rep actually do? They identify every available space that meets your criteria (including spaces that are not publicly listed), negotiate economic terms using current market data on comparable transactions, review the LOI and lease for provisions that require modification, coordinate the build-out process and advocate for your interests at every point in the transaction. An experienced tenant representation broker knows the actual rents landlords are accepting, not just the asking rents they’re posting, and what concessions the market supports. In a first office lease, that market intelligence is worth far more than the fee you’re not paying.

One specific risk to understand: the landlord’s listing broker is legally obligated to represent the landlord’s interests, not yours. In states that allow dual agency, where the same broker represents both parties, this conflict is disclosed on paper, but the practical dynamic remains: the broker’s relationship and repeat business come from the landlord, not from a first-time tenant they will likely never transact with again. The incentive structure matters. A dedicated tenant representative has no landlord relationships to protect and no reason to steer you toward a deal that benefits the landlord over you.

Step 4: Evaluate Spaces and Understand the Full Cost Stack

When you tour spaces and receive proposals, the quoted rent per square foot per year is only the beginning of what you need to understand about each option’s total cost. First-time tenants often make location decisions based on the headline number, then discover the full economics later, sometimes at lease signing, sometimes not until the first annual operating expense reconciliation arrives.

Tenant Improvement Allowance (TI)

Almost all office leases include a TI allowance, the landlord’s contribution toward building out the space to your specifications. In today’s market, TI allowances in Class A and B office buildings typically range from $50 to $150 per rentable square foot, depending on market, building quality, lease term and your credit profile. A space with a higher quoted rent but a generous TI allowance may cost less in net-present-value terms than a lower-rent space with no allowance because you’re paying the build-out cost in one case and the landlord is in the other. Always model TI against total cost, not separately.

Free Rent

Free rent, months during which you occupy the space but pay no base rent, is a standard negotiating concession in virtually every commercial office market today. Typical free rent ranges from 1 to 2 months on a 3-year lease to 4 to 8 months on a 5- to 7-year lease, depending on market conditions. First-time tenants frequently leave this on the table by not knowing to ask. A tenant representative negotiates free rent as a standard component of the transaction, not an exceptional request.

Operating Expense Pass-Throughs

As noted in the lease type section, operating expenses above the base year stop get passed through to tenants in FSG leases. Before signing, request the building’s historical operating expense data for the past 3 years and have your advisor assess the typical year-over-year increase. A building with a history of large annual reconciliation billings is a real cost factor that doesn’t appear in the quoted rent.

Step 5: Negotiate the LOI Before You Agree to Anything

The letter of intent is the document that establishes the agreed business terms before the formal lease is drafted. It is the most important document in the lease process for a first-time tenant, because every term that is left out of the LOI will be filled in by the landlord’s attorney in the landlord’s preferred language. Once the LOI is signed and the lease drafting begins, your ability to introduce new provisions or reverse unfavorable terms is significantly diminished. The landlord’s team will defend every provision in their draft as “standard” or “consistent with what was agreed.”

At minimum, the LOI should specify: base rent (by year, with escalation rate defined), lease term, tenant improvement allowance (amount, delivery method and timeline), free rent (number of months and scope), renewal option (number of options, notice period and rent determination process), personal guarantee limits, permitted use definition, parking commitment, signage rights and, if applicable, an early termination option. Everything that matters to you as a tenant should appear in the LOI before you sign it. A tenant advisor will draft or review the LOI and ensure these provisions are present, specific and protective before you commit.

The LOI is also where your leverage is highest. The landlord is motivated to close the deal, and you still have competing options in play and the freedom to walk away at no cost. That motivation window closes once the LOI is signed. Use it.

Frequently Asked Questions

The post Your First Office Lease: A Step-by-Step Guide appeared first on Hughes Marino.

      

Related Stories

• Hughes Marino Advises on the Transformation of a Former Downtown Gym into Sanctuary, a First-of-Its-Kind Luxury Wellness and Longevity Club
• Q3 2026 Seattle & Puget Sound Office Market Report: A Tenant’s Field Guide
• A Tenant’s Window Opens as Vacancy Climbs and Development Stalls

 

The truth is straightforward: a tenant representative costs you nothing. In commercial real estate, the landlord pays the brokerage commission, and that commission is budgeted as a cost of leasing the space regardless of whether a tenant representative is involved. When there is no tenant broker, that portion of the commission doesn’t get passed to you. It stays with the landlord’s broker. What you lose, meanwhile, is an advisor whose sole job is to represent your interests in a transaction where the other side has a professional doing exactly that. This guide explains why the landlord’s suggestion to skip having your own broker is self-serving, what a tenant representative actually does and what going without one typically costs in concrete lease terms.

Hughes Marino’s Commitment to Tenant-Only Representation

Hughes Marino was founded on a simple premise: tenants deserve an advisor whose loyalty is undivided. In more than 30 years of practice, we have only strived to serve the interests of tenants and buyers. Every transaction our team has ever completed has been on behalf of a tenant or occupier, not a property owner, not a lender, not an investor. That singular focus is not a marketing position. It is the only way to eliminate the structural conflicts that define most commercial real estate brokerage.

The dominant model in commercial real estate is full-service brokerage: firms that simultaneously represent landlords on lease-up assignments, manage buildings on behalf of property owners, sell and acquire investment assets and occasionally represent tenants. In that model, your broker’s firm may have a significant existing relationship with the landlord of the building you are considering, a property management contract, an investment sale assignment or a leasing agency relationship worth far more than your transaction. Understanding whose interests are truly being served in a negotiation requires understanding who the broker’s firm is paid by across its entire business. At Hughes Marino, that question has one answer: tenants.

Why Landlords Make This Suggestion & What It Actually Means

To understand why a landlord would encourage you to skip your own broker, you need to understand how commercial real estate commissions work. When a commercial lease is signed, the landlord pays a brokerage commission, typically calculated as a percentage of the total lease value. That commission is budgeted into the deal from the beginning. In other words, it’s a cost the landlord expects to pay as part of filling their building.

In a standard transaction with both a listing agent (the landlord’s broker) and a tenant representative, that commission is split between the two brokers. When there is no tenant broker, the listing agent earns the entire commission. The landlord’s total cost is the same either way, but the distribution is what changes. When a landlord or their broker suggests you don’t need your own representation, they are telling you to remove the person who would otherwise be paid to advocate for your interests, while the person paid to advocate for the landlord’s interests remains and is even paid more to work against your interests.

The occasional offer to “pass along commission savings” deserves direct scrutiny. This typically takes one of two forms: a modest discount on the asking rent, or a nominal increase in tenant improvement allowance. The math rarely favors the tenant. A 1% reduction in rent on a five-year, 5,000 SF lease at $50 per SF is worth approximately $12,500 over the term. A skilled tenant representative typically secures rent reductions, free rent and TI allowance improvements worth multiples of that figure, negotiated from a position of market knowledge and adversarial professional experience that no landlord’s broker will ever provide, not to mention the 50+ non-financial issues they work to protect you on.

Who the Landlord’s Broker Works For & What That Means for You

The listing agent is not a neutral facilitator. They are a licensed real estate professional with a fiduciary duty to the landlord. That duty is not informal or aspirational. It is a legal obligation that requires them to act in the landlord’s best interests, which in every commercial lease negotiation means maximizing rent, minimizing concessions, securing the longest possible term and protecting the landlord’s rights under the lease.

That does not make listing agents dishonest. Most are professional and courteous. But courtesy is not advocacy, and being helpful with logistics is not the same as fighting for your economics. A listing agent who shows you available suites, explains the building’s amenities and walks you through the standard lease form is doing their job, for their client. The question you need to ask is who is doing that job for you.

The listing agent cannot share information that would disadvantage the landlord: including how long the space has been vacant, how eager the landlord is to fill it, what concessions other tenants received or what the landlord’s true walk-away position is.

The listing agent cannot advise you to push harder: recommending that you ask for more free rent, more TI allowance, a lower rent or better lease protections would directly conflict with their client’s interests.

The listing agent prepared the lease on behalf of the landlord: when you ask them to “explain” a clause, you are asking the person who drafted it in the landlord’s favor to tell you whether it is fair.

The listing agent’s commission is larger without a tenant broker: they have a financial incentive, not just a professional one, to close the deal without introducing tenant-side representation.

None of this is illegal or even unusual. It is simply how the commercial real estate industry operates when tenants choose not to engage their own representation. The listing agent does their job. The problem is that no one is doing yours.

The Market Intelligence Gap: Tenant Rep Resources & Data Fluency

One of the most valuable things a tenant representative brings to a commercial lease negotiation is not a particular negotiating tactic, it is information. Specifically, it is access to and fluency in the data that determines whether the deal in front of you is competitive. Without data, experience and market insight, you are negotiating from instinct and from whatever the landlord’s broker chooses to share. Below are a few examples of how market fluency comes into play:

Asking rent vs. effective rent: The landlord’s asking rent is rarely what comparable tenants are actually paying once free rent and TI allowances are accounted for. Net effective rent, the economic reality of a deal, can be 15% to 30% below the face rate in today’s office market. Without market comp data, you have no way to know whether the rate being quoted to you is at market, above it or significantly above it.

Sublease availability: In major U.S. office markets, sublease availability is running 5 to 11 percentage points above direct vacancy rates. Much of that supply, often at below-market rent, with existing improvements already in place, is invisible to tenants who only engage with the landlord directly. A tenant rep presents the full market, not just the landlord’s available suites.

TI allowance benchmarks: Tenant improvement allowances vary significantly by building quality, market, lease term and tenant credit. Knowing what the market is actually delivering in TI, not what the landlord offers first, is the difference between a space that meets your budget and one that doesn’t.

Lease comp protections: What free rent periods, renewal option structures, sublease rights and CAM caps have tenants in comparable buildings actually received? Without comp data, you have no anchor for what is achievable. The landlord’s broker knows. You should too.

The Two Broker Models: A Direct Comparison

The following table illustrates the core differences between working with the landlord’s listing agent directly and engaging your own tenant representation broker. The contrast is not about personality or effort. It is structural, built into how each party is hired, paid and legally obligated to behave.

What Unrepresented Tenants Leave on the Table

The economic difference between represented and unrepresented tenants is material and consistently documented across markets. The following comparison reflects typical outcomes in commercial lease negotiations in major U.S. markets, based on Hughes Marino’s transaction experience. These are not theoretical gaps. They are the lease terms that skilled tenant advisors routinely negotiate as standard, and that unrepresented tenants routinely fail to achieve.

To put this in dollar terms: on a 5,000 SF, five-year office lease at $50 per SF per year, the gap between an unrepresented outcome and a represented one, across rent, free rent and TI allowance alone, commonly ranges from $150,000 to $250,000 in total occupancy cost over the lease term. The tenant representative’s fee, which the landlord pays, is a fraction of that gap. The tenant captures the difference (not including all of the non-financial concessions the tenant representative is able to secure).

How to Choose the Right Tenant Representative

Not all tenant representation is equal, and understanding the differences matters before you engage an advisor. The most important distinction is whether the broker or their firm also represents landlords in any capacity. A broker at a full-service firm who “primarily” represents tenants is not the same as a broker at a firm whose business model is built exclusively around tenants. The difference shows up in subtle but important ways: which buildings they feel comfortable pushing hard against, which landlord relationships they protect and how willing they are to recommend relocation when the economics of staying are genuinely unfavorable.v

Verify exclusivity: Ask directly whether the broker’s firm represents landlords. If yes, ask whether they have any existing relationship (management contract, leasing agency or investment sale) with the landlord of the building you are considering. Conflicts are manageable only if they are fully disclosed.

Understand the fee structure: In almost all commercial tenant representation transactions, the landlord pays the broker’s commission. You should not be paying your tenant rep out of pocket. Confirm this structure up front and get it in your representation agreement.

Assess market coverage: If you are considering space across multiple markets, or if you think relocation to a different submarket might be worth exploring, make sure your broker has genuine coverage and transaction experience in all relevant areas, not just the building’s immediate neighborhood.

Start early: Tenant representatives are most valuable when engaged 18 to 36 months before your lease expiration, not 90 days out. Early engagement creates time to build genuine alternatives, run a full market survey and negotiate from a position of credible optionality rather than time pressure.

If you already have a lease you believe may contain unfavorable terms, or if you want to understand what your current lease says before you begin a renewal process, a lease audit is the right starting point. Hughes Marino’s team reviews existing leases to identify overpayments, missed options, unfavorable clauses and negotiating opportunities that may exist before the next lease cycle begins.

Frequently Asked Questions

The post My Landlord Says I Don’t Need a Broker. Is That True? appeared first on Hughes Marino.

      

Related Stories

• Hughes Marino Advises on the Transformation of a Former Downtown Gym into Sanctuary, a First-of-Its-Kind Luxury Wellness and Longevity Club
• Q3 2026 Seattle & Puget Sound Office Market Report: A Tenant’s Field Guide
• A Tenant’s Window Opens as Vacancy Climbs and Development Stalls

 

At Hughes Marino, we often say our culture is the one thing we can never outsource. We’ve grown across the country, but what makes the company feel the same in every office isn’t a playbook; it’s our team. That’s what makes hiring one of the most important things we do, and it’s why I care so much about getting it right.

After interviewing thousands of candidates for Hughes Marino—and tens of thousands throughout my career—I’ve learned that the best hires are rarely the ones with the most polished resumes. Experience and technical skills matter, and a resume can tell me where someone has been. What it can’t tell me is how they think, how they communicate or how they approach a challenge. Those things show up off the paper: in how a candidate prepares before we meet, the questions they ask when we talk and the way they follow through afterward. As small as they seem, those moments are usually a preview of how someone will do the work, support their colleagues and take care of our clients long after the interview is over.

Ownership Starts Before Day One

One of the first things I notice has nothing to do with experience. It’s whether someone takes ownership of the interview process itself, and what I love to see is initiative. When a candidate helps coordinate scheduling, comes in with thoughtful questions ready or follows up without being prompted, it tells me they’re already invested. It’s never a mark against someone who waits for direction, but the people who take those small steps on their own tend to bring that same energy to everything they do.

The same pattern shows up when I ask about projects that didn’t go as planned. The strongest candidates don’t start by explaining why someone else was responsible. They acknowledge their role, what they learned and what they’d do differently. Accountability isn’t about having a perfect track record; it’s about owning the moments that aren’t perfect.

These behaviors often translate directly into the workplace. Whether someone is supporting our advisors, managing a construction project or working with clients, success comes from thinking ahead, anticipating needs and adding value before someone has to ask.

Curiosity Says More Than Confidence

I’ve interviewed candidates with exceptional resumes who spent the entire interview asking about compensation, hours and benefits. While those are fair questions, the candidates who stand out to me are usually the ones already thinking about how they can contribute. They ask what training looks like, how different teams work together, what a typical day really feels like and how they can create value for our clients and our company.

That curiosity doesn’t disappear once someone is hired. The people who keep asking thoughtful questions are usually the ones who keep learning and finding better ways to support teammates and clients.

A Resume Tells Me What You’ve Done, A Conversation Tells Me Who You Are

Something that surprises candidates is that I don’t immediately jump into technical questions. I spend the first few minutes simply having a conversation. We might talk about the weekend, a recent vacation or something happening in the background. It’s not small talk. It’s the fastest way to see how someone actually thinks and naturally communicates.

Hughes Marino is a client-facing professional services firm, and across every department, our teammates build relationships. Technical skills are the foundation of the work, but they’re only part of what makes someone successful. The ability to communicate clearly, build trust and connect with clients matters just as much.

Those few minutes reveal how someone naturally engages with people in a way a resume never could. As technology reshapes hiring, those kinds of authentic conversations have become even more valuable.

Hiring Shapes More Than Your Team

If I could offer one piece of advice to other business leaders, it would be to stay involved in hiring. It can be tempting to delegate hiring to HR or department managers, but those decisions shape your culture for years to come.

At Hughes Marino, our leaders meet with candidates early in the process, not just at the end. Those conversations help candidates understand where we’re headed while giving our leadership team insight into what motivates each person beyond what’s written on a resume.

Every formal interview also includes a conversation about our company, structure and core values. Those aren’t simply talking points; they are the principles we rely on when making decisions and solving problems.

What This Means for Our Clients

We’ve built this discipline into our hiring process because our business is built on trust, and trust is not something you can evaluate after the fact. When a client chooses Hughes Marino, they are not just hiring a company; they are trusting the judgment, expertise and character of the people representing them throughout their real estate journey.

Everyone who joins our team carries a responsibility that extends beyond their role. The same thoughtfulness and scrutiny we apply before bringing someone on board helps ensure our clients are supported by people who take ownership, think ahead and create value at every step.

That’s why we treat every hire with such care. The strongest candidates aren’t always the ones with the most impressive credentials; they’re the ones who show ownership, curiosity and a genuine desire to create value for the people around them. Get that right, and you’re not just filling a role. You’re protecting the culture that clients feel in every interaction and the reason our team continues to do its best work. For any business leader, that is worth slowing down for.

The post What Interviews Reveal That Resumes Never Will appeared first on Hughes Marino.

      

Related Stories

• Hughes Marino Advises on the Transformation of a Former Downtown Gym into Sanctuary, a First-of-Its-Kind Luxury Wellness and Longevity Club
• Q3 2026 Seattle & Puget Sound Office Market Report: A Tenant’s Field Guide
• A Tenant’s Window Opens as Vacancy Climbs and Development Stalls

 

How the IE Stacks Up to Other Major U.S. Markets

From 2023 to the present, consumer behavior has drifted toward pre-2020 norms, and the demand for industrial space has also reversed due to the slowing of imports coming into the United States. When compared to the nation, the Inland Empire has shifted from being one of the tightest industrial markets in the country, to now one of the top five softest at just over 14%. Overall, the national industrial markets are not healthy and have moved solidly into leaning toward being tenant-favorable, and only Los Angeles and San Francisco are still marginally below 10%, considered to be somewhat in landlord territory.

The Inland Empire Swing—the Biggest in the U.S.

The Inland Empire regional industrial market has become very tenant-favorable post-Covid, as supply and demand conditions for industrial space have shifted such that availability rates around the region have spiked in the last three years. Availability has more than doubled since pre-Covid from just under 7% to now just over 14%, and still rising. An even more troublesome benchmark is that the IE market availability today is four times higher than at the tightest market conditions in recent memory when IE availability was approximately 3.5% towards the end of 2021.

Oversupply Contributors

Much of this availability spike is based on speculative overdevelopment of industrial buildings built from 2020 to 2025 to support the surge of online consumer purchasing during the early years of Covid. Nationally, between 2020 and 2025, 1.2B SF of industrial space was built around the country, a historic supply increase of 13.11% over those five years, of which 111.9M SF was added to the Inland Empire inventory, the largest amount of new construction in any market in the United States.

The second contributor to this oversupply is that the region has been haunted by a spike in industrial sublease inventory, averaging 14,000,000 SF for three years running. A national phenomenon, many industrial companies are looking to shed excess space they leased during the 2020-2022 run-up. The specific reduction of imports coming into Southern California, and an increase in warehouse options in the Los Angeles area, have caused many Inland Empire operators to lean down their footprints and put excess space on the market for sublease. There are values to be had throughout the region in all size ranges. This sublease condition is expected to last well into 2027 and 2028, and creates a condition where tenants have become landlords’ biggest competitors.

How the Submarkets Stack Up

The chart below shows how every IE submarket is at 10% or higher availability, with the Temecula/Menifee region having the biggest uptick at over 25%, one of the highest availability rates in the entire U.S. With the exception of Corona/Eastvale, every other submarket has doubled availability as compared to the start of 2020, with Temecula/Menifee tripling since and Chino/Chino Hills increasing by 5x—one of the highest proportional spikes in the entire country. Warehouse space for lease often has been on the market for a year or two. While landlords are reducing rents, and free rent of a month per year has become table stakes, even on renewals, building owners have entered into a knife fight over tenants as demand continues to be tepid, and many tenants that do enter the market are looking to downsize.

Overall, the Inland Empire and national industrial markets have done a massive pivot in the last year where many U.S. metro areas have higher availability, a reversal in rents and a spike in concessions. We are dealing with a new normal where tenants can expect to continue to find good values and numerous opportunities for several years to come, as long as they are proactive in addressing their lease expirations and aggressively go to market with the right tenant advisor who is free of landlord listing conflicts of interest, to create the proper leverage and optionality.

Market statistics provided by CoStar Group.

The post The IE Industrial Market Firmly Tilts Toward Tenants appeared first on Hughes Marino.

      

Related Stories

• Q3 2026 Seattle & Puget Sound Office Market Report: A Tenant’s Field Guide
• A Tenant’s Window Opens as Vacancy Climbs and Development Stalls
• Hughes Marino Advises on the Transformation of a Former Downtown Gym into Sanctuary, a First-of-Its-Kind Luxury Wellness and Longevity Club