In commercial real estate transactions, information is often as valuable as the property itself.
Financial records, expansion plans, operational details, and internal decision-making documents frequently change hands long before a lease is signed or a purchase is completed.
This is where Non-Disclosure Agreements (NDAs) play a central role.
In commercial real estate (CRE), NDAs are commonly used to establish clear expectations around confidentiality and information handling during negotiations, underwriting, and due diligence. While they are standard practice in many transactions, their purpose and structure are often misunderstood.
This article provides a high-level overview of NDAs in commercial real estate, why they are used, and how they function within the broader transaction process.
A Non-Disclosure Agreement (NDA) is a legal document that outlines how confidential information may be shared, used, and protected between parties. In a CRE context, NDAs are
typically executed before sensitive information is disclosed during:
Lease negotiations
Property sales or acquisitions
Portfolio reviews
Financial underwriting and due diligence
The agreement defines what information is considered confidential and establishes limitations on disclosure to third parties.
From a commercial real estate standpoint, NDAs help create a structured framework for transparency while protecting proprietary business information.
Commercial real estate transactions often require early disclosure of sensitive data to evaluate feasibility, pricing, and long-term strategy. Without confidentiality protections in place, this information could be misused or shared outside of the intended transaction.
NDAs are commonly used to help:
Limit unauthorized distribution of financial or operational data
Protect internal business strategies or growth plans
Establish trust during early-stage negotiations
Reduce the risk of competitive exposure
For business leaders, NDAs can provide a level of comfort when sharing information that is not otherwise publicly available.
While the scope of an NDA can vary, commercial real estate NDAs often reference confidentiality related to:
Financial statements or rent rolls
Lease terms and operating expenses
Expansion, relocation, or consolidation plans
Space utilization data
Internal forecasts or capital planning assumptions
Non-public property or portfolio information
The agreement typically defines confidentiality broadly, while also identifying exclusions such as information already in the public domain.
NDAs in CRE are commonly structured in one of two ways:
A one-way NDA is used when only one party is disclosing confidential information. This is common when a tenant, buyer, or seller is sharing internal data for evaluation purposes.
A mutual NDA applies when both parties expect to exchange confidential information. These are often used in more complex negotiations or strategic discussions where disclosure flows both ways.
The structure selected usually reflects the nature of the transaction and the direction of information sharing.
NDAs are typically executed early in the transaction process, often before:
Detailed financials are released
Lease documents are shared
Formal proposals are exchanged
Due diligence begins
They are not a substitute for transaction documents, but rather a foundational step that enables open communication during evaluation and negotiation.
In many cases, NDAs remain in effect even if a transaction does not move forward.
Despite their widespread use, NDAs are sometimes misunderstood. Common misconceptions include:
An NDA guarantees a deal will happen
An NDA only governs confidentiality, not transaction outcomes.
NDAs are only for large companies
Businesses of all sizes may use NDAs when sharing sensitive information.
NDAs eliminate all risk
NDAs help define expectations but do not remove all potential exposure.
Understanding the purpose and limitations of NDAs helps set realistic expectations throughout the process.
In commercial real estate transactions, advisors often help coordinate the flow of information between parties once an NDA is in place. This can include managing document access, organizing data rooms, and maintaining structured communication during negotiations.
By establishing clear confidentiality parameters upfront, NDAs can support a more efficient and professional transaction process.
In today’s commercial real estate environment, speed and information access often influence outcomes. NDAs allow parties to move forward with discussions while maintaining appropriate safeguards around sensitive business data.
For companies evaluating multiple options or negotiating in competitive markets, confidentiality can be a critical component of strategic planning.
Non-Disclosure Agreements are a standard but important part of commercial real estate transactions. They help define how sensitive information is handled, shared, and protected during negotiations and due diligence.
Understanding the role of NDAs in CRE provides business leaders with greater clarity as they navigate leasing, acquisition, and portfolio decisions.
Disclaimer
This article is for informational purposes only. It does not provide legal, financial, or investment advice.
Written by the Keyser Editorial Team