The landlord's broker wants an answer by Friday. The space looks right and the rent works. There's a restroom, an electrical panel, and a rooftop unit already in place.
Nobody has checked whether that panel can carry your equipment. Nobody knows whether your use needs a new approval from the city. And nobody can tell you what the build-out will actually cost.
That leaves two options that both feel wrong. You can sign now and hope. Or you can spend months and real money on full architectural drawings for a space you might not get.
Neither is the right move. Before you sign a commercial lease, you don't need permit drawings or a final contractor bid. You need answers to a short list of questions that decide whether the space can work and roughly what it will cost. For anything you can't answer in time, you need a lease clause that matches that specific risk. This article covers both.
Do you need full drawings and a contractor's bid before you sign the lease?
Usually not. What you need first is a test fit and a preliminary budget tied to a defined scope.
A test fit is a preliminary layout. It shows whether your operation fits and functions in the space: the rooms you need, the equipment, the clearances, and how people move through it. It is not a permit set. Design normally moves in stages after that. Design development adds the mechanical, electrical, plumbing, and structural detail. Construction documents follow, and those are what support a final price and a permit application.
Paying for that full set before you control the site has two costs. If the deal falls through, the drawings are worth very little at another address. And the landlord's own requirements for plans, contractors, and building connections usually aren't settled until the lease and its work letter are. Designing ahead of them can mean designing twice.
The answer flips when something about the space could end the deal outright. Examples include a use that needs a new city approval, a kitchen exhaust route nobody has confirmed, or equipment that may need more power than the building can deliver. In those cases, pay for the specific engineering or agency check before you sign. If you can't, sign only with a contingency written for that exact risk.
What's the smallest investigation that's actually enough?
Enough to answer six questions. It doesn't need to be a full inspection package. It needs to be the least evidence that tells you the space can legally hold your business, that nothing disqualifying is hiding in it, and what the work will roughly cost.
- Is your use allowed here? Check zoning and any prior approvals for the space. A previous tenant in a similar business is a clue, not an answer.
- Does your layout fit? A test fit tells you whether the advertised square footage holds your operation once required rooms, restrooms, and clearances are drawn in.
- Do the existing conditions match the records? Compare whatever drawings exist against what's actually built. Undocumented walls, circuits, and restrooms are common in older space.
- Can the systems carry your equipment? Compare your equipment list against the electrical service, heating, ventilation, and air conditioning (HVAC), and plumbing. An open slot in the panel doesn't mean the utility can deliver more power.
- What's your accessibility exposure? Altering a space can bring the entrance, route, and restrooms that serve it into your project. For space offered to a business open to the public, California Civil Code §1938 requires the lease to state whether the premises have had a Certified Access Specialist (CASp) inspection. If a CASp report exists, ask for it before you sign.
- Will the landlord let you do the work? Confirm you can make the roof penetrations, connections, and changes your design needs, through the landlord's approval process.
For a space that was already built out by someone else, the specific things to look at are above the ceiling, at the panel, on the roof, at the sprinkler heads, and in the permit history. We covered that walk-through in why "move-in ready" retail space still produces change orders.
How much deeper does a restaurant, dental office, or change of use need to go?
Deeper in proportion to how much your business depends on specific equipment, ventilation, utilities, or a new approval. The size of the space doesn't drive it. A small dental suite can carry more pre-lease risk than a large, conventional office.
Office
Office space is the strongest candidate for a light investigation before signing, when the space already serves a compatible use and your changes are limited. You still need a test fit, a check that the HVAC and electrical suit your layout and headcount, an accessibility screen, and a clear picture of the landlord's approval process.
Retail
For retail space, what matters is the activity, not the word "retail." A shop selling merchandise and a shop that also prepares food or offers services can need very different systems and approvals. Settle exactly what you'll do in the space, then check it against the landlord's delivery specification.
Restaurant
For a restaurant, the first thing to define is your menu and equipment list, not the interior design. The cooking equipment decides the hood, the makeup air, the exhaust route, the grease system, the hot water, and the gas and electrical loads. Without that list, nobody can tell you whether the existing systems will work. California disputes have shown the stakes. In Williams v. Puccinelli, neither party realized at the start that restaurant and bar use would require substantial alterations, including work outside the leased second floor. If the space already has a kitchen, test it against your own menu. We covered how in will the existing HVAC actually run your restaurant?
Dental and medical
For dental and medical space, classify the facility before you pick the site. Under California law, the services you offer and how the practice is owned and licensed decide which rules and which reviewing agency apply. The word "clinic" in a business name doesn't decide it. For dental offices, the equipment drives the plumbing, electrical, vacuum, and compressed-air requirements. American Dental Association guidance calls for an equipment consultant to check the mechanical, electrical, and plumbing (MEP) drawings for omissions before bidding. An existing dental suite can also carry inherited conditions, such as amalgam buildup in the old plumbing, that need specific handling during demolition.
Light industrial and flex
For light industrial and flex space, start with the process: what you make, what you store, how high you stack it, and what equipment runs. Those answers drive power, exhaust, structural support, and fire review. The amount of finished office area tells you very little.
Change of use
A change of use raises two separate questions. Zoning asks whether your activity is allowed at this address. The building and fire codes ask whether this space meets the requirements for your occupancy. A landlord's willingness to lease to you answers neither. If your use needs a discretionary approval, such as a conditional use permit, that process can take far longer than building plan review, and your lease timing should be planned around it.
Is a free estimate the same as a feasibility review?
No. A free estimate gives you a number. A feasibility review tells you whether the space can work and which assumptions that number depends on. That's true of every contractor's estimate, including ours.
An early estimate is only as reliable as three things behind it:
- The scope it prices. Was it priced from a test fit with your equipment on it, or from square footage and a photo?
- The existing conditions it assumes. Does it assume the HVAC, panel, and sprinklers can stay as they are? Has anyone checked?
- What it excludes. Look for "by others," "excluded," or "not included" next to fire alarm, utility work, accessibility upgrades, or design fees. An excluded item still has to be paid for. It just hasn't been priced yet.
Before you sign a lease, what you want is a preliminary budget, not a contract price. A good one states its scope and lists its assumptions, so you can see what would change it. A firm-sounding total with no stated basis can be lower simply because it left more out. Commercial layout and test-fit work is what gives an estimator a real scope to price.
What should you lock in at the letter of intent stage?
Lock in the terms that are hard to reopen once the deal is agreed. A letter of intent (LOI) sets out the business terms before the lease is drafted. Once both sides have agreed the economic package, trying to reopen a major point can feel to the landlord like renegotiating the deal.
From a build-out point of view, these terms belong in the LOI:
- An investigation period and access. Time to investigate, the right for your designer and consultants to get into the space, and delivery of the building's drawings and records.
- The delivery condition, written as a list. Labels like "vanilla shell," "warm shell," and "turnkey" don't have one consistent meaning. Write down which walls, HVAC, restrooms, electrical capacity, and connections will be there, and in what condition.
- The event that starts rent. A calendar date, possession, completion of the landlord's work, or a permit. Each one puts a different risk on you.
- Who can build for you. Whether the landlord restricts your architect, contractor, or roof work, and any supervision or management fee, including what it's charged on.
"Nonbinding" doesn't mean free of risk. California practitioner analysis distinguishes an unenforceable agreement to agree from an agreement to negotiate, which can be enforceable. An LOI can also contain binding provisions, such as exclusivity or confidentiality, inside a document that's mostly nonbinding. Have a commercial real estate attorney read it before you sign it.
The allowance, the work letter, and how improvement money actually gets paid are covered in what your lease already decided about your build-out.
Which lease contingencies actually protect you, and from what?
Each lease contingency protects against one specific thing. The common mistake is assuming one of them covers everything. A permit contingency, for example, doesn't protect you if the build-out turns out to be unaffordable, the utility upgrade takes too long, or the health department hasn't approved your kitchen.
Feasibility period
A feasibility period gives you time to investigate before you lose the right to walk away. It only works if it defines what you're investigating, sets a deadline, explains how you give notice, and says what happens to your deposit and investigation costs.
Permit contingency
A permit contingency protects you if the building permit isn't issued. It doesn't tell you the work is affordable or that utilities will arrive on time.
Use or business-approval contingency
A use or business-approval contingency covers a zoning approval, a business license, or a liquor license. Each approval is separate. Protection for one doesn't cover the others your business needs.
Design-approval contingency
A design-approval contingency protects you if the landlord won't approve the layout, systems, or roof penetrations your business needs. A right to submit plans is not the same as a right to build the design you need.
Cost-approval contingency
A cost-approval contingency lets you exit or adjust if developed pricing comes in above an agreed amount. It needs a defined scope and a clear list of which costs count, or excluded items can quietly get around the cap.
Delivery condition and outside date
A delivery condition with an outside date says what the landlord must deliver and by when, and what happens if they miss it. Getting keys on a certain date isn't the same as getting a space ready for your work.
Extension rights
Extension rights let a deadline move when an agency or utility takes longer than planned. The extension should be tied to the actual dependency that might run late. A generic reference to "permits" can be too narrow.
Whether a landlord will agree to any of these, and how each is worded, is a negotiation and a legal drafting question. A heading on a clause doesn't tell you what it does. Your attorney reads the whole allocation.
How long does Sacramento plan review take, and why isn't that your schedule?
The City of Sacramento publishes target review cycles for commercial alterations, and they're shorter than your actual timeline. The city's schedule dated March 4, 2026 lists these cycle times in working days:
- Under 3,000 square feet and under $50,000: 10 days for the first review, then 5 and 5 for later cycles.
- Under $400,000: 15 days, then 10 and 10.
- Over $400,000 and under $3 million: 20 days, then 15 and 15.
Those are review cycles, not the time to an issued permit. The city requires a complete submission before the clock starts, and the building official can adjust the times. Each round of corrections adds your design team's response time plus another review cycle.
Building review is also only one track. For a food facility, Sacramento County Environmental Management states that its plan review runs within 20 business days after payment, with an estimated 10 business days for resubmittals. The county's instructions allow building review to run at the same time. Even so, it's a separate clock.
A realistic schedule runs on three clocks:
- Your design team's clock. Design, coordination, and corrections.
- The landlord's clock. Plan approvals, delivery of the space, and any landlord work.
- The agencies' and utility's clock. Building, fire, health, and power.
Negotiate your rent terms against all three, not against the shortest published number.
The Bay Area has the same trap in a different form. San José's Streamlined Tenant Alteration Review (STAR) offers a 90-minute coordinated review, with a 50% surcharge, for eligible projects. Medical and dental offices and clinics are excluded, as are changes of use or exiting and a long list of complex scopes. Before you plan a schedule around a fast-track program, confirm your project actually qualifies.
Already signed? What's still worth doing before the construction contract?
Quite a lot. Signing the construction contract is a second decision. It's your last clean chance to check scope, price, and timing against the lease you've already signed.
- Read your rent clause against all three clocks. Find out what event starts rent, what event starts any free-rent period, and what happens if an approval runs late. Check whether "free rent" covers base rent only, while operating charges keep running.
- Confirm the landlord's rules before you hire anyone. If the lease limits which architect, contractor, or subcontractors you can use, or requires landlord approval of drawings and pricing, build that into your team and schedule first.
- Tie the price to specific documents. Ask whether the contract price is based on submitted, corrected, or approved drawings, and get the assumptions and exclusions in writing. The difference between a preliminary estimate and a contract price is exactly those lines.
- Check what's still open in the lease. A feasibility or approval period may still be running. Know its deadline before your design work uses it up.
- Read what an early agreement commits you to. In design-build, where one firm designs and builds, an early agreement can already be a construction commitment, even if the final price comes later. Read what it obligates you to, what you pay if you stop, and whether you keep the drawings. That applies to our agreements as well.
What do you need ready before the first walkthrough?
You need a written description of how you'll use the space, and one person who makes decisions. The walkthrough measures the space against that description, so it has to exist before the walkthrough starts.
- What happens in the space, room by room.
- Your equipment list, with each item's electrical rating.
- Headcount, customer capacity, and hours.
- The name of the one person who approves decisions.
When one firm does the walkthrough, the drawings, and the permit, what the walkthrough finds goes straight into the drawings that get permitted and priced. There's no handoff where a note about an undersized panel gets lost between a consultant and a builder. That's how we approached the showroom and office tenant improvement on Marconi Avenue in Sacramento, starting from an assessment of the existing space and its zoning.
If you're still choosing between two layouts or two equipment packages, settle that first. Every check in this article starts from it. If you have a space in mind and you're deciding how much to know before signing, talk with our team about a walkthrough.
