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Commercial Rental Lease Agreement Templates

A Commercial Lease Agreement is a document between a landlord and tenant for the use of space that is for any type of business or storage related use. The tenant, usually being an entity, should undergo an extensive credit check as the individuals are not usually responsible for the business liabilities. If the business is new or not credible to the landlord’s liking then a personal guaranty should be authorized which requires the tenant to individually guarantee the lease if rent is not paid.

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Booth (Salon) Rental Agreement – Tenant pays the owner of a business, typically a salon, for the use of a booth or area for cutting/coloring hair, massage, cosmetic, or nails.

Garage (Parking) Rental Agreement – For space to be used such as an office, a vehicle, or for storage.

Facility Event Space Rental Agreement – An agreement to rent a setting for an event.

Triple-Net (NNN) Lease Agreement – Tenant pays an agreed upon amount to the landlord in addition to all expenses apart of the property including but not limited to taxes, common area maintenance (CAM’s), and real estate taxes levied by the county and/or city/town.

Addendums & Attachments

Personal Guarantee (Guaranty) – If the business is new or does not have a considerable amount of assets the landlord may request that an individual be personal liable for the contents of the lease agreement.

What is a Commercial Lease Agreement?

Most people think of a lease agreement in terms of apartments and single-family homes for rent. However, businesses also use leases to rent out buildings for themselves. This form of contract is called a commercial lease agreement. Most businesses like shopping centers, restaurants, downtown offices, and small mom-and-pop shops don’t actually own the property they conduct business from. They rent it!

Businesses do this because it’s often cheaper for them to rent than it is for them to buy the property. Commercial lease agreements allow companies to negotiate terms and responsibilities with the landlord, and it offers them a way out if they need to relocate or close shop. It makes sense for businesses to rent, especially for chain commercial outlets and retail centers.

How to Use a Commercial Lease Agreement

Commercial lease agreements are different from residential lease agreements. They provide many more provisions in the contract to protect both the landlord and the business. Essentially, the purpose of a commercial lease is to make sure there are no loose ends that can leave either party at risk.

The terms of commercial lease agreements will be different depending on the specific property and the business that owns the lease. Terms are often negotiated between the two parties to determine:

  • The leasing period
  • How utilities are paid
  • Who is responsible for maintenance (or how the responsibility will be divided)
  • Whether improvements and changes to the property are allowed (and to what extent)
  • How the property will be used
  • What’s allowed on the property (hazardous materials, chemicals, machinery and combustibles)
  • Annual rent increases (for long-term leases to keep up with the market)
  • Description of the property (including living spaces, appliances, number of rooms and types of rooms)
  • Whether the business will have exclusive rights to the property
  • Whether the company can sublease or assign sections within the property
  • What parking is available and how it will be paid
  • Compliance with ADA (Americans with Disabilities Act)
  • And how property taxes will be split between the business and the landlord (if the owner does not agree to pay for it entirely themselves)

This list is not inclusive of everything that may need to be outlined in the commercial lease agreement. There may need to be more special provisions made depending on the property type or business.

Different Types of Commercial Properties

There are a variety of different commercial properties out there, and it’s important for businesses and landlords to know the difference. For instance, it wouldn’t make sense for a landlord to advertise a property to retail outlets if the space was designed for a warehouse.

So to keep things straight, here are the most common types of commercial properties used today:

  • Industrial—Industrial properties are the warehouses and factories often located outside of the cities. Prime industrial properties will be close to major transportation routes and will be up to code for manufacturing purposes. The most common types of industrial properties include heavy manufacturing, light assembly, flex warehouse, bulk warehouse and R&D facilities.
  • Office—Office commercial properties include a large subset of buildings used for business operations. They can be in the heart of downtown or on the outskirts of towns and suburbs. These properties have three categories based on their quality of construction and location (Class A, Class B, and Class C).
  • Retail—Retail properties are ideal for most shopping centers, restaurants and small shops. These properties can make the lease a bit more complicated depending on the size of the building. The bigger the building (like shopping malls for instance), the more likely that there will be multiple tenants renting out spaces for themselves. This will often include additional terms to negotiate how space will be blocked off for different tenants or if one business will have exclusive rights to the property.
  • Multifamily—Multifamily properties include apartment complexes, condos, town-homes and other large residential properties. You may think that these would fall under residential lease agreements. However, the entire building is usually owned by an association or property management company. These businesses lease out to tenants for residential purposes, making these properties commercial  at first rather than strictly residential.
  • Hotels—Hotels will obviously have to be large or high-rise buildings that can accommodate essential hotel services. These properties often have to have spaces for lounges, a restaurant or dining area, many bathrooms, and available parking. Prime properties are close to major tourist areas or major business centers.
  • Special Purpose—Special purpose properties include everything from storage units, senior and assisted living spaces, hospitals, churches, and everything else you could think of that is not anything already listed above. These have their own accommodation needs that have to be met as commercial properties. Landlords intending to lease special purpose commercial properties should be savvy about each of their needs and ideal accommodations.

As you can see, commercial lease agreements are very common and play a big role in how many businesses operate. Any business can—and often does—rent its property rather than own it. Hopefully you now have a better understanding of what a commercial lease is, why it’s important, and what types of commercial properties are available.