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

Construction Loan

A construction loan is a short-term, interim financing option used to fund the building or major renovation of a property, with funds disbursed in. more

Certificate of Occupancy

A certificate of occupancy is an official document issued by a municipal authority confirming that a building complies with applicable codes and is. more

Bylaw Variance

A bylaw variance is official permission granted by a municipal authority allowing a property owner to deviate from local zoning or building bylaw. more

Absorption Rate

Absorption rate is a metric that measures the rate at which available properties are sold or leased in a specific market over a given period.. more

Corporate Restructuring

Corporate restructuring refers to the reorganization of a company’s operations, assets, or liabilities, often under court supervision, to improve. more

Consumer Proposal

A consumer proposal is a formal, legally binding agreement in Canada between an individual and their creditors to repay a portion of their debt over. more

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