Commercial Lease

Understand commercial leases in Canadian real estate, how they work, what types exist, and what business owners and landlords must consider.

Commercial Lease

June 13, 2025


What is a Commercial Lease?

A commercial lease is a legally binding agreement between a landlord and a tenant for the rental of property used for business purposes, such as offices, retail, or industrial spaces.

Why Commercial Leases Matter in Real Estate

In Canadian real estate, commercial leases differ significantly from residential leases in terms of negotiation, customization, and legal complexity.



Common commercial lease types:
  • Gross lease: landlord pays most expenses
  • Net lease: tenant pays base rent plus some expenses
  • Triple net lease (NNN): tenant pays all operating costs



Commercial leases often involve longer terms, tenant improvements, and clauses for renewal, assignment, and termination.



Understanding commercial leases is critical for business owners, landlords, and investors managing risk, obligations, and occupancy rights.

Example of a Commercial Lease in Action

The business signs a five-year commercial lease with renewal options and tenant improvement allowances for their downtown retail store.

Key Takeaways

  • Used for leasing business and retail spaces
  • Often longer and more complex than residential leases
  • Includes various lease types with cost-sharing structures
  • Key for occupancy rights and investment planning
  • Requires legal review and negotiation

Related Terms

Additional Terms

Rent Increase Guideline

The Rent Increase Guideline is an annual limit set by the Ontario government that controls how much landlords can raise rent for most existing. more

Principal Residence Exemption

The Principal Residence Exemption (PRE) is a Canadian tax benefit that exempts capital gains tax on the sale of a property designated as the. more

Strata Property Act

The Strata Property Act is the legislation governing strata corporations and strata-titled properties in British Columbia. It sets out rules for. more

Reserve Fund Study

A reserve fund study is an assessment conducted for condominiums to evaluate the condition of common elements and estimate future repair and. more

Status Certificate

A status certificate is a document issued by a condominium corporation in Ontario that provides important financial and legal information about a. more

Tarion Warranty

The Tarion Warranty is Ontario’s mandatory new home warranty program that protects buyers of new construction homes and condos. It provides coverage. more

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