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What to know about your commercial lease

Posted by Greg Chew on Sep 20, 2016 10:24:05 AM

what to know about your commercial lease

Finding the right retail, office or industrial space for your business to operate in is a long process, one that culminates with lease negotiation and signing. 

Every lease is different and should be tailored to meet your needs but will also meet those of the landlord. Your lease is a legally binding contract between your business and your landlord, it’s important to understand the terms, and items included in that contract. While not every commercial lease is the same there are certain points and terms that are covered in most leases.

The following overview will help you to know what to look for in a lease and give you an understanding of what that may mean for your business.

Understanding commercial lease terms

Term and Rent

These are fairly self explanatory clauses however aside for setting out the amount you will pay each month and the length or your lease, they should also include renewal options and the type of lease. Differing leases include different rent calculations, the type of lease you sign will determine how much you will pay each month.


Types of commercial leases you may sign

To learn more about what each lease entails, click here
  • Triple net lease
    • Net lease
  • Gross rent lease
    • Semi-gross lease
  • Percentage rental lease


Looking for space inclusions 

Your contract should outline the square footage included in the lease and what shared spaces are available to your business. This is especially important if you are leasing a shared office space or industrial space. You will also want to confirm any responsibilities you have with that building like snow removal, landscaping etc. 

The lease should also include who is responsible for repairs or any space improvements and it should outline the ownership or those improvements or additions. Occasionally the lease may include a built to suit space, in other instances the improvements and additions you make to your space may be your financial responsibility. 

Other lease items to looks for and consider

  • Subletting options
  • Taxes (who will pay property/municipal taxes)?
  • Utilities (who will pay utilities, how is it metered, shared etc.. all utilities should be covered)
  • Insurance 
  • Signage 
  • Escape clause and refusal rights

How to prepare to sign your commercial lease

When you sign a commercial lease for your business it is often a two part process. First you will need to sign an offer to lease and then you will sign a second leasing contract that will detail the negotiation of your lease.

When you are starting the leasing process it is necessary that you understand what is included in your lease. You should be prepared to negotiate terms and do not be afraid to seek the advice of a lawyer, accountant or your own commercial representative.


In the past I have covered how to navigate the search for a commercial space in Niagara to read more advice on how to find a retail space click here and for information on industrial market in Niagara click here. 

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Topics: commercial real estate

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