Many tenants of commercial properties are quite surprised to see such a detailed lease agreement, as commercial leases differ greatly from residential leases. It is therefore of the utmost importance that you thoroughly read and clearly understand the terms of your commercial lease.

When examining your commercial lease agreement, pay close attention to the following areas of the commercial real estate lease to ensure that you have a firm grasp of any and all terms listed in the agreement:

  • Lease term – This is essentially the length of the lease; where it begins, and where it ends, and whether there are any renewal options.
  • Monthly rent – This section, of course, details your monthly rental obligations; however, it may also contain allowable increases (commonly referred to as escalations). Pay close attention to this section; in particular, how the landlord will figure out allowable increases.

Your monthly rent section will also detail whether your rent amount covers other items, such as insurance, property taxes and maintenance costs, or whether the landlord will charge you separately for these items. Generally, a “gross” lease is one that includes all fees and costs; while a “net” lease will include only the monthly rental payment.

  • Security Deposit – This section will detail the security deposit amount for which you are responsible. More importantly, however, it will detail the conditions you must meet to see the return of your security deposit once the lease has ended.
  • Rental Space – This section of the commercial real estate lease agreement will detail exactly what space you are renting and how the landlord has measured the space. Expect common areas, such as hallways, bathrooms and elevators, to be included in this space.
  • Improvements, Modifications, Build Outs – If the landlord has agreed to make certain improvements or build outs to your space, this section will detail this. It will also include detailed information regarding what is being finished or improved, who will pay for them, and who will own them once the lease ends.
  • Repair and Maintenance – This section of the lease will detail who is responsible for maintaining and repairing the commercial space.
  • Sublet Options – This section of the lease will detail whether you may sublease the space to another tenant.