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Types of Commercial Leases

When it comes to leasing a property for commercial use, you have plenty of leases to choose from.

Commercial leases vary according to the type of property; an office lease will be different than a lease for retail space in a shopping centre. But commercial leases fall into some fairly clear categories.

Gross Lease

Under a gross lease arrangement, the tenant of the property pays a set amount of rent to the landlord monthly. The amount is agreed upon and stated in the written lease. The landlord is then responsible for paying the taxes, insurance and any other costs associated with owning the commercial rental property.

Net Lease

A net lease arrangement is slightly different. Under this type of lease, the tenant is responsible for paying the rent and a portion of the maintenance fees, insurance and other operating expenses for the commercial property. While this type of arrangement adds more costs to the renter, it relieves the property owner from some of the costs of owning and maintaining the property.

Triple-net Lease

Triple-net leases are most commonly used for industrial buildings or freestanding facilities. Under this lease agreement, the tenant is responsible for paying for all of the fees associated with operating the build. This is on top of the monthly rent the tenant pays the landlord for occupying the space.

Shopping Center Lease

When tenants rent retail space in a shopping centre, they typically have an agreement with the owner that they will pay a rental rate determined by the square footage of the space they are leasing. Tenants renting retail space usually also pay fees to cover common areas of the centre, such as the cleaning crew and parking light lighting.

Some retail space leases also require the tenant to pay a percentage of their gross sales to the landlord and may be responsible for a portion of the property taxes. If the retail space is inside a mall, the lease might also charge fees for signs, maintenance of common areas and for deliveries.

Land or Ground Lease

Some commercial tenants lease the land or grounds from a landlord and then they build their own property on it, which is called a land or ground lease. When the lease is up, the building and any other improvements made to the land revert to the landlord.