Eighteen months ago, a growing D2C brand signed a 3-year lease for 8,000 sq ft in Baner. The rent looked fair, the location was convenient, and the deal closed fast. Nobody read the escalation clause too closely. Nobody negotiated an exit.

Fast forward to today: the team has shifted to a hybrid model, headcount is down 30%, and they're paying for space they don't use - with an 15% rent escalation kicking in at renewal, and no legal way out for another 18 months.

Lock-in Period: The Clause That Traps Growth (and Shrinkage)

A lock-in period is the minimum duration you're contractually obligated to stay and pay rent - regardless of whether your business needs change. In Pune's commercial market, lock-ins commonly range from 12 to 36 months depending on lease tenure, fit-out investment by the landlord, and negotiating leverage.

Why it matters both ways:

• If your team scales up faster than expected, you're stuck in space that's now too small - while still paying for it.
• If your team scales down (as in the example above), you're stuck paying for space that's now too big, with no exit until the lock-in ends.

What to negotiate: A shorter lock-in in exchange for a slightly higher headline rent is often a better trade than a long lock-in with a "cheaper" number that isn't actually cheaper once you factor in flexibility.

Escalation Clauses: The Rent Increase You Agreed To Without Reading

Almost every commercial lease in Pune includes a rent escalation clause - a pre-agreed percentage increase applied at fixed intervals, typically annually or every 2-3 years. The commonly seen range is 5% annually or 10-15% at each renewal/block, though this varies by landlord, building grade, and market conditions at the time of signing.

The problem isn't that escalation exists - it's standard practice and landlords are entitled to it. The problem is when occupiers don't model out the cumulative cost across the full lease term before signing.

A simple gut-check before you sign: Take your Year 1 rent, apply the escalation clause across your full lock-in period, and look at the Year 3 (or Year 5) number. If that number would change your decision to sign, you needed to negotiate the escalation rate - not just the base rent.

Exit Clauses: Your Only Insurance Against the Unknown

An exit clause (or break clause) defines the conditions under which you can terminate the lease early - usually with a notice period (60-90 days is common) and sometimes a penalty (often equivalent to a few months' rent or forfeiture of the security deposit).

Here's the uncomfortable truth: most tenants don't negotiate for an exit clause because it feels like planning for failure. But an exit clause isn't about pessimism - it's about acknowledging that 3 years is a long time in any business, and flexibility has real financial value.

Questions worth asking before you sign anything:

• What's the notice period if I need to exit early?
• Is there a financial penalty, and is it capped?
• Does the exit clause apply only after the lock-in ends, or can it be triggered during lock-in under specific conditions (e.g., mutual consent, force majeure)?

What This Means for Occupiers vs. Investors

If you're an occupier: Treat lock-in, escalation, and exit terms as equally important as the headline rent - because together, they determine your real cost and flexibility over the lease term, not just your Year 1 outflow.

If you're an investor evaluating a pre-leased asset: These same clauses directly affect your WALE (Weighted Average Lease Expiry) and the durability of your rental yield. A tenant locked in for 5 years with modest escalation is a more stable income asset than one on a short lock-in with an aggressive escalation clause the tenant may push back on at renewal.

The Fix Isn't Complicated - It's Just Often Skipped

None of this requires legal expertise to get right the first time. It requires reading past the headline rent and asking about lock-in, escalation, and exit terms before signing - not after the team has shrunk and the lease has become a liability instead of an asset.

That's the exact review Which Floor runs on every lease we advise on - for occupiers and investors - at zero brokerage cost to you.