What are the Elements of a Commercial Lease?

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Before you rent out a commercial property for your business, you need to understand the main elements of a commercial lease are and what provisions it typically contains.

Base Lease Rent

Base lease rent for a commercial property is just like a residential lease where have a base rent based on your square footage. Some centers may also charge you a small fee for common areas like bathrooms and hallways in internal setups. Make sure you find out exactly what is included in your base rent.

Additional Rent

In addition to the base rent, you may also have to pay for your pro-rata share (generally your store square footage divided by the total amount of square footage of the shopping center) of operating expenses like building insurance, business use, marketing fees. Also, your share of snow removal, landscaping, and maintenance is also known as common area maintenance.

Lease Term

This is based on how long you intend to be in the same location. A typical lease term for a commercial lease is a minimum of 3 years and can go up to 10 years or longer. The lease term makes you obligated for the property during this time. That is why it is important to feel confident in your lease term decision.


Usually, the tenant is expected to pay the costs of electricity, gas (if applicable), Internet, water/sewage, and trash since they will be the party using the premises. Your lease will usually include this in your list of responsibilities.

Tenant Improvements

If you need to make changes to suit your business needs, you are probably responsible to make the improvements to the store yourself. The landlord might give you the finished floor and lighting but all the other improvements are generally on the tenant. Again, this should be included as a clause in the lease to avoid any disagreements later.

Option Periods

If at the end of the lease, you would like to renew your lease, then this section would you the option to renew for an extended period. The specific details of this clause will differ from one commercial lease to another.


In some cases, if the business is not doing as well as you hoped, you may choose to share the space with another tenant or sublet the whole space. With this clause, you may avoid having to pay a hefty early termination fee if you don’t intend to or cannot use it anymore. Not all commercial leases will have this clause as it’s typically prohibited.

Customer and Employee Parking

Be sure to check that the property has accommodation for both customer and employee parking, which should ideally be included in the lease so there can be no issues later.

It’s important to cover all your bases, so make sure your commercial lease covers all these elements.



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