*While this information is based on current legislation and reliable sources, it is for general informational purposes only. We recommend consulting with your legal team to address your specific lease agreements and compliance needs.

Commercial tenant rights in the United States are entering a new era in 2025. Historically, commercial leases have been governed chiefly by contract, with fewer statutory protections than residential tenancies. However, recent legislation and shifting tenant expectations are reshaping how office, retail, industrial, and life science property owners must approach leases. Understanding these nationwide changes, along with specific examples from various states, will help you adapt effectively, ensuring you remain both compliant and competitive.

A New Era of Tenant Protections Nationwide

Lawmakers around the country are increasingly extending protections to commercial tenants, especially small businesses, mirroring some rights long enjoyed by residential renters. The goal is to level the playing field between landlords and tenants and prevent the displacement of community businesses by powerful landlords or speculative investors. For property owners and managers, this means following new rules and rethinking traditional lease practices.

• Small Businesses in Focus: Many of the new protections target small “mom-and-pop” enterprises and nonprofits. These tenants often lack bargaining power and resources, and legislators see them as needing a boost to survive economic pressures. For example, California’s new law explicitly protects qualified small business tenants, acknowledging the uneven power dynamics between local shop owners and commercial landlords.
  
  
• Post-Pandemic Pressures: The COVID-19 pandemic highlighted the vulnerabilities of small businesses. Even in mid-2023, 55% faced rent increases. Policymakers responded with measures like eviction moratoriums (temporary) and now more permanent rights. This pro-tenant momentum is carrying into 2025, forcing commercial landlords to adjust.
  
  
• Changing Attitudes: There’s a broader understanding that stable commercial tenants support local economies. Pushing for stronger tenant rights is seen as a strategy to counter high rents and speculation that push out small businesses. Cities like Los Angeles have even launched programs to help legacy businesses stay put, and community groups are exploring collective property ownership to give tenants more control. The takeaway is clear: supporting tenants is increasingly viewed as a public good, not just a private contract matter.
  
  

Key Legal Changes in 2025 (State by State)

Tenant rights laws vary by state and city, but the 2024–2025 period brought significant new legislation that commercial property owners must heed. Below, we highlight some of the most impactful changes across the U.S.:

California: New Protections for Small Commercial Tenants (SB 1103)

California led the charge with SB 1103, known as the Commercial Tenant Protection Act, which takes effect on January 1, 2025. This law introduces several first-of-their-kind rules for commercial leases involving “qualified commercial tenants” – generally small businesses meeting employee count limits (e.g., micro-enterprises with ≤5 employees, restaurants <10 employees, or nonprofits <20 employees). Even though it only impacts a fraction of leases, when it does apply, it imposes significant new obligations​:

• Extended Notice for Rent Changes: Landlords must give advance written notice for rent hikes. For month-to-month qualified tenants, 90 days’ notice is required for rent increases over 10%, and 30 days’ notice for increases of 10% or less. (Previously, 30 days was sufficient in most cases.) A rent increase isn’t effective until the end of this notice period expires. This gives small tenants more time to plan or negotiate when facing steep rent jumps.
  
  
• Longer Notice to Terminate Tenancy: If a qualified tenant is on a periodic lease (like month-to-month), California now mandates 60 days’ notice to terminate if the tenant has been in place at least a year (30 days’ notice if less than a year). In other words, you can’t abruptly end a month-to-month lease for a long-term small business without two months’ warning. (The tenant, however, can still terminate with the shorter notice – e.g., 30 days – giving them flexibility to leave on a quick timeline​.)
  
  
• Lease Language Accessibility: To promote transparency, if lease negotiations were conducted primarily in one of several common non-English languages (Spanish, Chinese, Tagalog, Vietnamese, or Korean), the landlord must provide a written translation of the lease in that language. This translation must include all terms and be delivered before the lease is signed. If a landlord fails to do so, the qualified tenant has the right to rescind (cancel) the lease. This is modeled on California’s residential law, which recognizes that many small business owners are immigrants who are more comfortable in other languages.
  
  
• Transparency in Operating Costs (CAM Fees): SB 1103 tackles the opaque common area maintenance (CAM) and operating cost fees that often frustrate tenants. Landlords cannot charge operating cost fees to a qualified tenant unless strict conditions are met. Those conditions include:
  
  
  • Proportional allocation of costs among tenants (e.g., by square footage) with documentation.
    
    
  • Costs must be for expenses in the last 18 months or expected in the next 12 months – no padding with stale or speculative charges​.
    
    
  • Before signing a lease, tenants must be notified of their right to inspect the books supporting these costs.
    
    
  • Upon request, landlords must supply supporting documents within 30 days.
    
    
  • No charging for expenses that the tenant already pays directly or that have been reimbursed by insurance or others.
    
    
  • No changing the formula to allocate costs if it would increase the tenant’s share, unless justified with written notice and proof​.
    
    
• In short, pass-through expenses must be fair, timely, and thoroughly documented. Landlords who violate these rules face liability for damages and even potential treble (triple) damages and attorney fees if they acted willfully or fraudulently. The law essentially forces an “open-book” approach to CAM fees for small tenants, addressing a common pain point.
  
  

What this means: If you operate in California, review your lease forms and procedures now. Identify which of your tenants might qualify for SB 1103 protections (tenants should self-identify with a notice, but it’s wise to be proactive). Ensure your staff knows about the 90/30 day notice rules for rent changes, prepare lease translations when needed, and keep detailed records for operating expenses. Many California landlords are adding lease clauses where tenants confirm whether they are a “qualified tenant” or not to clarify applicability.

Seattle, WA: Capping Deposits and Personal Guarantees

On the city level, Seattle has broken ground with a new ordinance (Seattle Ordinance 126982, effective Jan. 2024) that limits the financial obligations a commercial landlord can impose. After years of bolstering residential tenant protections, this is Seattle’s first major foray into regulating commercial leases. Key provisions include:

• Security Deposit Limits: Seattle commercial landlords cannot demand more than the first and last month’s base rent as security. This cap applies to any combination of security deposit and letter of credit. In practice, it means no massive upfront deposits – a relief for small retailers who often were asked for 3-6 months of rent as security in the past.
  
  
• Personal Guaranty Limits: The ordinance also caps personal guarantees (where an individual business owner guarantees the lease). Guarantees now cannot exceed an amount equal to two years’ worth of base rent plus certain tenant improvement costs. This prevents a scenario where a tenant could be personally on the hook for, say, an entire 5- or 10-year lease obligation, which could be financially ruinous if the business fails.
  
  
• Scope: These rules mainly aim to protect retail, food, and similar small businesses. Notably, Seattle exempted office space, R&D lab space, medical offices, and farming leases from the ordinance. In other words, a tech company leasing office space in Seattle doesn’t get the deposit cap, but a boutique shop or restaurant does. Landlords had to notify existing tenants about these new rights by August 2024 and must inform new tenants moving forward.
  
  

Seattle’s approach may be a sign of things to come in other cities. It directly addresses the financial barriers to leasing (huge deposits and onerous guarantees) that often hamstring small businesses. Property owners in Seattle have had to adjust quickly to stay within the new limits or face fines of $500 per day for violations. If you own commercial property there (especially if you lease to retail tenants), double-check that your lease terms for deposits and guaranties comply.

Michigan: Strengthening Tenant Rights and Transparency

Michigan is another state moving to strengthen tenant rights, though much of its recent activity has focused on residential contexts. In 2024, Michigan lawmakers introduced a “Tenant Empowerment” bill package aiming to give renters more tools and protections. Key proposals in Michigan have included:

• Right to Repair and Deduct: This legislation explicitly guarantees tenants’ right to repair issues and deduct costs from rent if landlords don’t address serious problems promptly. It would prohibit lease clauses that attempt to waive this right. For commercial landlords, this trend means you should expect that habitability and maintenance obligations can’t be shrugged off—even business tenants may gain leverage to enforce repairs.
  
  
• Organizing Rights: Protecting tenants’ ability to form or join tenant unions/associations without retaliation. While this concept is common in residential apartments, it could translate to multi-tenant commercial buildings (like shopping centers or office co-ops) where tenants band together for collective bargaining. Savvy property managers might start treating their small commercial tenants a bit more like a community of residents – engaging with any tenant associations proactively rather than resisting them.
  
  
• Advance Notice of Rent Increases: Similar to California’s law, Michigan proposals seek to require “adequate notice” before rent hikes for tenants. Although details were being debated, it signals a wider trend: don’t spring large rent increases on tenants without warning. Providing ample notice (60, 90 days or more) could become standard best practice even where not yet law.
  
  

As of 2025, Michigan also enacted a law banning source-of-income discrimination in housing – meaning landlords can’t reject an applicant just because they pay via a housing voucher or similar assistance. That particular rule applies to residential rentals, but it underscores the state’s pro-tenant direction. Commercial landlords in Michigan should keep an eye on Lansing – the legislative climate is shifting toward tenant-friendly policies. Even if your office or storefront leases aren’t yet directly regulated like housing, the expectation of fair play and transparency is rising across the board.

Other Notable Developments:

• New York: New York State is considering a bill to require commercial landlords to mitigate damages if a tenant breaks a lease early. In plain terms, if a business tenant leaves, the landlord must try to re-rent the space rather than simply suing the tenant for all remaining rent. Many states already mandate this duty for leases; New York making it explicit for commercial spaces would be a significant shift (landlords could no longer just let a property sit and collect rent from the old tenant). New York City has also discussed a “Commercial Tenant Bill of Rights” that requires specific information on leases, reflecting ongoing attention to commercial lease fairness.
  
  
• Illinois and Others: A number of states have longstanding laws on specific aspects of commercial tenancies. For example, Illinois law limits how fast a landlord can evict a commercial tenant by requiring a reasonable notice period for certain eviction proceedings. While not new in 2025, these existing laws in various states remind us that commercial tenant rights aren’t entirely uniform nationwide. Always check if your state’s statutes cover things like lockout procedures, security deposit handling, or disclosure requirements for commercial leases.
  
  
• Federal Level: There is no federal commercial tenant rights law (unlike, say, federal fair housing laws for residential). However, federal pandemic relief programs and rhetoric about supporting small businesses have indirectly pressured landlords to be more accommodating. For instance, accepting federal Emergency Rental Assistance for a commercial tenant (if available) could come with conditions. Stay tuned on any federal initiatives, but for now, most action is at state and local levels.
  
  

Emerging Tenant Expectations in 2025

Legislation isn’t the only driver of change. Commercial tenants themselves are demanding more flexibility and transparency in their lease relationships. Even if the law doesn’t mandate these features, meeting tenant expectations can help property owners attract and retain businesses – a competitive differentiator in a tough market. Here are three key expectations emerging in 2025 and how they impact office, retail, industrial, and life science properties:

• Flexibility in Lease Terms: Gone are the days when every commercial lease ran 5-10 years fixed. Companies today (especially post-COVID) want shorter leases, options to expand or contract space, and clauses that let them adapt. In a 2023 survey, most corporate real estate executives said their firms seek shorter lease durations and the ability to flex space usage up or down. This is evident in offices, where hybrid work means firms are hesitant to lock in large spaces for a decade. Even industrial and life science tenants, who traditionally signed long leases due to custom build-outs, are negotiating for early termination options or expansion rights to handle fast-changing business needs. Retailers are requesting pop-up leases or rolling renewals to hedge against uncertain economic cycles. As a landlord, consider offering flexible lease structures – for example, a base term of two years with multiple short renewal options or the right to terminate early with a penalty. While this introduces more leasing turnover, it may actually attract tenants who wouldn’t sign at all under rigid terms.
  
  
• Transparency and Trust: Today’s commercial tenants expect a “what you see is what you get” approach to rent and fees. They are likelier to push back on mysterious surcharges or opaque expense reconciliations. This dovetails with laws like California’s SB 1103, which requires full documentation of operating cost pass-throughs. But even where not required, smart landlords are voluntarily sharing clear breakdowns of common area maintenance charges, property tax escalations, and utility costs. Why? Because transparency builds trust and reduces disputes. If tenants can see exactly how their share of expenses is calculated, they are less likely to feel cheated (and less likely to involve lawyers or withhold rent). In 2025, some property managers are adopting open-book policies and regular expense reports to tenants as a service feature. Particularly in multi-tenant office buildings or shopping centers, consider holding an annual meeting or sending a detailed statement to tenants about operating costs. This level of clarity can become a selling point (“no hidden fees” leasing), setting you apart from competitors. Remember, communication is key: as one industry survey noted, many independent landlords managed to “accommodate the needs of cash-poor tenants” during challenging times by negotiating and being upfront, which in turn helped those landlords eventually rebound strongly.
  
  
• Modernized Lease Structures & Amenities: The very definition of a commercial lease is evolving. Tenants now may expect creative structures like percentage rent (for retailers, rent based on sales), gross leases, or capped nets to avoid unpredictable costs or even flex space memberships (especially in offices) where they can scale up conference room use on demand. Life science firms might look for clauses about shared lab amenities or safety certifications. Across the board, there’s a rise in demand for “plug-and-play” spaces and turnkey deals – tenants want the space ready and functional, with less capital outlay on their part. This means landlords offering build-out allowances, pre-furnished suites, or shared services (like reception, mail handling, etc., often seen in coworking models) will have an edge. Essentially, tenants expect a partnership: they want landlords to have some skin in the game and to provide more than just four walls. If you can structure leases that align incentives (for example, a lower base rent but a slice of the tenant’s revenue growth or flexible renewal terms tied to performance), you may fill vacancies faster in this market. Flexibility and creativity in deal-making are becoming as important as the location and price per square foot.
  
  

Adapting as a Landlord: Compliance and Competitive Advantage

With the landscape shifting, property owners and managers need to be proactive. Adapting to enhanced tenant rights isn’t just about avoiding penalties – it’s also a chance to differentiate your properties and maintain high occupancy. Here are actionable steps to consider:

1. Stay Informed (and In Touch with Counsel): Laws can vary dramatically by state and city, so make it routine to monitor legal updates wherever you operate. For instance, if you own buildings nationwide, you should know that in California, you must now include SB 1103 info in rent increase notices, while in Seattle, you cannot collect an oversized deposit. Consult with your legal counsel to create a compliance checklist for each jurisdiction. Being caught off-guard by a new law could lead to fines or voided lease clauses. Subscribe to real estate law newsletters or join owner associations that provide legislative alerts.
   
   
2. Review and Update Lease Agreements: It’s critical to audit your standard lease forms and edit out any provisions that might violate new tenant-protection laws. For example, remove any clauses that disclaim a duty to mitigate damages (in places like New York, where that’s poised to be required) or that waive a tenant’s right to make repairs (in places following Michigan’s lead). Insert any required notices or clauses – California landlords might add a representation for the tenant to declare if they are a “Qualified Commercial Tenant,”​ so both parties are clear on SB 1103 applicability. Ensuring your paperwork is up-to-date not only avoids legal trouble but also shows tenants you are professional and respectful of their rights.
   
   
3. Build Flexibility into Your Portfolio Strategy: Consider offering a mix of lease lengths and options in your building. If historically you only did 5-year minimum terms, try marketing some smaller suites with 1-2 year leases to capture startups or pop-up retail concepts. You can charge a slightly higher rent for a shorter commitment (reflecting your risk), which many tenants are willing to pay for flexibility. Also, consider including co-working or spec suite components in office and life science buildings to accommodate evolving space needs. By being ahead of the curve on flexible leasing, you position your property as a solution for modern tenants’ uncertainty. This can be a competitive differentiator when tenants are comparing offerings.
   
   
4. Embrace Transparency and Communication: Make it a policy to communicate clearly and early with tenants about any changes. If you need to raise rents due to tax hikes or increased costs, give as much notice as possible – even if your state law hasn’t yet mandated 90 days, providing it can build goodwill (and meet pending requirements that could come into effect). Send breakdowns of operating expenses annually and invite questions. Some forward-thinking property managers are implementing online portals where commercial tenants can see real-time updates on building maintenance or track their requests. Being transparent is no longer seen as an extra – it’s becoming expected, and it can prevent disputes before they start. As one example, California now obligates landlords to show supporting expense documents within 30 days of a tenant’s request.​ Even if you’re not in CA, consider adopting a similar stance voluntarily.
   
   
5. Train Your Team and Align Your Culture: Your property management and leasing teams should be educated about these tenant rights developments. Front-line staff who understand the spirit of the new laws (keeping small businesses thriving, fostering fairness) will do a better job negotiating win-win solutions. Try adopting a “tenant-centric” approach – treat tenant inquiries and issues with the same attentiveness one might use in residential management. Promptly addressing maintenance, being lenient on minor lease breaches, or offering payment plans during hardship can actually reduce vacancy and turnover costs in the long run. Many independent landlords who survived the recent economic turmoil did so by working with their tenants. In 2025, having a reputation as a tenant-friendly landlord can be a selling point. Prospective tenants talk to each other; being known for fairness could attract referrals and keep your spaces filled.
   
   
6. Leverage Tenant Rights as a Marketing Advantage: Rather than viewing these regulations as a burden, flip the script in your marketing. Advertise that your leases are “SB 1103 compliant” or that you offer transparent pricing with no hidden CAM markups. In areas without formal tenant laws, you can voluntarily adopt a “Tenant Bill of Rights” for your building – for example, promising reasonable notice of changes, collaborative conflict resolution, and fair allocation of costs. This can be especially powerful in attracting startups and mission-driven organizations (like nonprofits) to office or lab spaces and artisanal retailers to shopping districts. By aligning yourself with the intent of tenant rights, you differentiate your property as forward-thinking and ethical. It’s a way to turn compliance into a feature that tenants value.
   
   

Embracing Change for Mutual Benefit

The rise of commercial tenant rights in 2025 is reshaping the commercial real estate landscape. For property managers and owners, the message is clear: adaptation is essential. Laws from California to New York are pushing for greater fairness, and tenants are seeking more flexible, transparent relationships. While it may require changes in how you operate, embracing these trends can lead to more sustainable tenant-landlord partnerships. When tenants feel respected and secure, they are more likely to renew leases, take care of the property, and contribute positively to the building community.

As tenant rights expand, the smartest operators are using this shift to build loyalty, boost renewals, and stand out in a competitive market. Cove’s 2025 Guide to Commercial Tenant Retention Strategies breaks down how to do exactly that — with actionable tips on creating a tenant-forward experience that keeps businesses thriving in your building.

Download the guide to future-proof your retention strategy.