Free Commercial Lease Agreement Template

Table of Contents

• What Is a Commercial Lease Agreement?
• By State
• Types of Commercial Lease Agreements
• Types of Commercial Property Leased
• How to Write a Commercial Lease Agreement
• Commercial Lease Agreement Sample
• Lease Changes and Tenant Modifications

What Is a Commercial Lease Agreement?

A commercial lease agreement is a legal document that allows a tenant to rent a property, such as an office, store, or warehouse, for business purposes. It outlines the tenant’s right to use the property in exchange for rent and possibly other fees, such as operating costs, taxes, maintenance, and parking.

Tenants are permitted to conduct business on the premises as long as they adhere to the specified terms. Tenants may also be responsible for property taxes, insurance, and maintenance expenses.

When Do You Need a Commercial Lease Agreement?

You need a commercial lease agreement whenever you rent out non-residential property to a business. Whether you’re leasing out office space, a retail storefront, a warehouse, or a restaurant location, a written lease protects both parties and clearly defines the terms of the rental.

Common Use Cases:

• Leasing a storefront to a retailer
• Renting an office to a professional services firm
• Providing warehouse space to a distributor or manufacturer
• Leasing a commercial kitchen to a catering company

By State

Each state has its own rules for commercial leases, so it’s important to use a lease agreement that matches your state’s laws. A state-specific template makes sure you include the right details, follow local rules, and keep both the landlord and tenant protected.

Choose your state below to download a free customizable commercial lease agreement that meets your legal requirements.

Types of Commercial Lease Agreements

There are four main types of payment structures in commercial lease agreements based on how the tenant pays base rent and operating expenses.

Full Service or Gross Lease

In a full-service or gross lease, the rental rate includes all property operating expenses.. Operating expenses such as utilities, maintenance, and real estate taxes are already factored into the rent.

However, the landlord can add clauses to reserve the right to pass down any future increases in operating expenses to the tenant.

• What Landlords Pay: All property operating expenses, including utilities, maintenance, and real estate taxes.
• What Tenants Pay: The rental rate, which includes all operating expenses. If stipulated by the lease agreement, tenants might also pay for any increases in operating expenses.
• Common Uses: Often used in office buildings and some retail spaces where landlords want to offer tenants a simple, all-inclusive rental rate.

Net Lease‌

In a net lease, none of the operating expenses are included in the rental rate.

Therefore, in addition to the base rent, the tenant must also pay their proportional share of the three “net” operating expenses – property taxes, property insurance, and standard area maintenance (CAM).

• What Landlords Pay: Landlords typically pay for the structural maintenance of the building.
• What Tenants Pay: Base rent plus their proportional share of the three “net” operating expenses: property taxes, insurance, and CAM. The specifics depend on the type of net lease:
  • Triple Net Lease (NNN): Tenant pays a portion of the property taxes, property insurance, and CAM
  • Double Net Lease (NN): Tenant pays a part of the property taxes and property insurance
  • Single Net Lease (N): Tenant pays a part of the property taxes
• Common Uses: Common in commercial real estate, particularly for single-tenant properties like industrial sites or standalone retail buildings.

Modified Gross Lease

A modified gross lease (or modified net lease) is a hybrid of gross and net leases. In a modified gross lease, the landlord and the tenant negotiate and share the operating expenses.

Usually, the tenant is responsible for the base rent and CAM, and the landlord handles the property taxes and insurance.

Sometimes, the tenant pays base rent only at the beginning of the lease and then pays a portion of the operating expenses later.

• What Landlords Pay: Generally, the property taxes and insurance.
• What Tenants Pay: The base rent and sometimes CAM. The specifics can vary significantly based on what is negotiated in the lease.
• Common Uses: This type of lease is versatile and can be used across various commercial properties, depending on the negotiation between the tenant and the landlord.

Percentage Lease

In a percentage lease, the tenant pays the base rent on the property and a monthly percentage of the gross revenue from the business operating the rented space.

• What Landlords Pay: Similar to other lease types, landlords might pay for the property’s structural maintenance and, depending on the lease agreement, some operating expenses.
• What Tenants Pay: Base rent plus a percentage of the gross revenue of the business operating within the rented space.
• Common Uses: Primarily used in the retail sector, especially in malls and shopping centers where the success of the tenant’s business directly benefits the landlord.

What Payment Structure Should You Use?

Consider how predictable you want monthly costs to be. Gross leases offer simplicity, while net and percentage leases can adjust with business performance and expenses.

Types of Commercial Property Leased

Commercial lease agreements can be used for many types of properties, depending on the kind of business. Whether it’s a store, office, or warehouse, the type of space you’re renting affects the lease terms, any changes needed to the space, and the legal rules you have to follow.

Retail Space

This includes storefronts, restaurants, and spaces in malls or shopping centers. These locations are designed to attract foot traffic and are a good fit for customer-facing businesses.

Office Space

Used by professionals and service-based businesses. These leases often occur in high-traffic business districts and may include amenities like parking and shared conference rooms.

Industrial Property

These spaces are built for manufacturing, shipping, or storing goods. Leases are usually long-term and often include large areas and loading docks.

Flex Space

Flex spaces combine office, storage, and industrial features in one place. They’re great for startups or growing businesses that need a space that can do multiple things.

Specialty Commercial Properties

These are unique spaces that don’t fit the usual categories, like salon booths, commercial kitchens, or event venues. They’re often used by small businesses with specific needs.

Other Commercial Lease Templates

These agreements cover more specialized or less common leasing situations, such as renting parking spaces or business equipment.

How to Write a Commercial Lease Agreement

A well-drafted commercial lease should clearly outline the expectations, responsibilities, and rights of both landlord and tenant. Below are the key sections you should include when creating a lease agreement:

1. Parties Involved: List the full legal names of both the landlord and the tenant. Include their business names (if any) and how to contact them.
2. Property Description: Give the full address of the property, the size in square feet, the suite or unit number, and any extras like parking spots or storage areas.
3. Lease Term: Write down when the lease starts and ends. If the lease can be renewed, include how that works and how much notice is needed.
4. Rent Details: State the base rent amount, payment frequency (monthly or annually), due date, grace period, and payment method.
5. Type of Lease Structure: Define whether the lease is Gross, Net (N, NN, or NNN), Modified Gross, or Percentage, and explain how costs are split.
6. Security Deposit: Indicate the deposit amount, whether it earns interest, and terms for refund or forfeiture.
7. Permitted Use: Clarify the tenant’s use of the property (e.g., retail store, law office) and any usage restrictions.
8. Maintenance and Repairs: Outline who handles specific repairs and upkeep inside the unit and in common/shared areas.
9. Improvements and Alterations: State whether the tenant can modify the space, what requires landlord approval, and removal responsibilities at lease end.
10. Utilities and Operating Expenses: List which party is responsible for each utility and expense (e.g., CAM fees, property tax, insurance).
11. Insurance Requirements: Explain what insurance the tenant must carry, such as liability or property insurance, and whether the landlord must be named as an additional insured.
12. Subleasing and Assignment: Indicate if subleasing or lease assignment is allowed, and under what conditions, landlord approval is required.
13. Default and Termination: Define what counts as default, how much notice must be given, and the terms for early lease termination.
14. Dispute Resolution and Governing Law: Choose how disputes will be resolved (mediation, arbitration, or court) and which state’s laws will apply.
15. ADA Compliance and Hazardous Waste Clauses: Add clauses for ADA accessibility and compliance with environmental laws regarding hazardous materials.

Commercial Lease Agreement Sample

Below is a sample commercial lease agreement to give you an idea of how each section works. You can edit this form with Legal Templates, customizing it to meet your needs before downloading it in PDF or Word format.

commercial-lease-agreement

Lease Changes and Tenant Modifications

Commercial leases often need updates during or after the original term. Whether you’re renewing, extending, modifying terms, subleasing to another tenant, or offering a purchase option, use the correct form to make those changes legally binding.

Lease Renewal Agreement

Use this when the tenant wants to continue leasing the property after the original term ends under similar or revised terms.

Lease Addendum

A commercial lease addendum allows changes to an existing lease without drafting a new agreement. It’s ideal for updating terms like rent, responsibilities, or permitted use.

Lease Extension Addendum

This is used to briefly extend the end date of an existing lease without rewriting a new agreement. It is often used when both parties need more time before committing to a full renewal.

Early Termination Letter of Commercial Lease

An Early Termination Letter is used when a tenant or landlord wants to end the lease before the agreed expiration date. It helps document the reason for termination and any responsibilities related to the early exit.

Lease Termination Letter

Use a commercial lease termination letter to formally end a commercial lease before or at the end of the term. It notifies the other party of the termination date and outlines any final responsibilities such as rent, cleanup, or returning keys.

Commercial Sublease Agreement

Use this when a tenant rents out part or all of their leased space to another business (subtenant), with landlord consent.

Lease-to-Own Agreement

This lease includes an option for the tenant to purchase the commercial property at the end of the lease or under agreed-upon terms.