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

Public Realm Improvements

Public realm improvements are enhancements to public spaces such as sidewalks, parks, plazas, and streetscapes, often funded or contributed by. more

Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

Green infrastructure refers to natural or engineered systems that manage stormwater, reduce heat, and improve sustainability in developments.. more

Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual 1% tax on the value of vacant or underused residential property owned by non-resident,. more

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