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A commercial lease agreement is a contract for renting business property. It sets the premises, term, rent, deposit and each party’s duties, and this page offers a free template. Landlords and business tenants need one, especially when the tenant will alter the space.
Use the template below, or start from our full list of lease agreement templates if your rental is not a business rental. Read on for lease types, a cost-per-square-foot formula, negotiation tips and a step-by-step guide to the form.
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A commercial lease agreement is a contract in which a landlord rents a store, office, warehouse or other space to a tenant for business use. It records the rent, the length of the term and who pays for what while the business occupies the space.
People search for the same document under several names: business lease agreement, commercial rental agreement, commercial lease contract, commercial real estate lease agreement, commercial property lease agreement and building lease agreement. The form on this page answers to all of them.
The tenant is usually a registered company, so the agreement goes into detail on upkeep, future alterations, subleasing and any right to first offer if the landlord sells.
You need a commercial lease agreement when a business will occupy property that another person or company owns, whether that is a whole building, one floor or a single room. Use one in these situations:
A different document fits when the rental is narrower than a full business premises, because each narrow arrangement has its own terms and its own template on FormsPal. Pick the closest one:
A commercial lease differs from a residential lease mainly in who occupies the property and how much of the deal is open to negotiation. The clearest test is use: a home calls for a residential lease, and a place of business calls for a commercial one.
| Point | Residential lease | Commercial lease |
|---|---|---|
| Tenant | A person or family who lives in the property | Usually a company, with employees and customers coming and going |
| Occupants | Often names who may live there and limits visitors | Rarely limits visitors, because the business depends on them |
| Term | Usually short and renewed as it ends | Usually several years, often with a fixed base rent |
| Rent | Depends on location and amenities | Also depends on the length of the deal, the cost of alterations and how expenses are split |
| Security deposit | Follows the deposit rules for housing, covered on our lease agreement pages | The parties write the agreed amount into the lease. In North Dakota, N.D.C.C. § 47-16-07.1 limits what a lessor may demand or receive as security to one month’s rent, with exceptions, and how that limit applies to a commercial lease is an open question to put to a lawyer (see the note under the state table) |
| Guarantor | Sometimes asked of a tenant with little rental history | Common for startups, whose ability to pay depends on future sales |
| Upkeep | The landlord usually handles building repairs | The lease divides repairs in detail, and the tenant often takes on more of them |
| Alterations | The tenant adjusts to the property as it stands | A clause usually allows changes once the landlord has seen the plan |
| Relocation | Rarely part of the deal | A relocation clause, if the lease has one, says when the landlord can move the tenant, so read it closely |
A mixed property, such as a shop with an apartment above it, does not fit either column neatly. Ask a lawyer which type of lease suits it before anyone signs.
A commercial lease agreement should include the parties, the premises, the term, the rent, the deposit, the permitted use, and the rules on repairs, assignment, signs, default and holdover. The FormsPal template covers each of these:
Accessibility and hazardous materials clauses say which party handles building access and the safe disposal of waste, and they deserve a careful read against your type of business. A dental clinic, hair salon or restaurant can produce waste that a plain office does not.
Federal and local rules on these subjects are outside what this page covers, so ask a lawyer to review these clauses in the final lease. Our template gives environmental compliance its own section. Page 10 holds Sections XXV to XXX, including Governing Law and Compliance with Environmental Laws, with no blanks.
Commercial leases are grouped by how the rent is paid, which area is rented and how the deal is set up. Most real estate leases are first a gross or a net lease, and the other labels describe the space or the financing around it.
Payment type decides who carries the running costs of the property, so it changes the real cost of two leases that show the same base rent. Compare these before you compare rent figures:
Area-based leases cover less than a full premises, such as a parking area, a booth or a room booked for set dates, and each has its own FormsPal template. These are the common ones:
Set-up labels describe the money and ownership behind a lease, and many of them apply to equipment or vehicles as well as buildings. Ask an accountant or tax adviser which label fits, because these labels affect how a deal is reported:
Commercial property falls into three broad types, office space, retail stores and industrial properties, and each type draws a different kind of tenant. A landlord should know which features that tenant weighs most before setting a price or writing a listing.
Office space is rented mainly on its location and presentation, because the building affects how clients see the business. Large companies sometimes rent entire buildings or an office park, while mid-sized companies tend to lease a few floors. A landlord with several office tenants usually needs a team to handle their concerns.
Retail property is rented for foot traffic and location more than for size, so a small unit on a major road can compete with a larger one elsewhere. Strip malls, malls and shopping centers draw more walk-in customers, and their base rent tends to reflect that.
Industrial property suits manufacturers and other businesses that put floor area and complex operations first, so these sites are often outside city centers, where large plots cost less to rent. Before signing, a landlord should ask to see the tenant’s manufacturing and environmental licenses, because the tenant’s operations can affect the neighbors and the long-term value of the site.
Leasing out a commercial property runs from comparing similar properties to handing over the keys, and each stage feeds what goes into the lease. Follow the steps below in order if you are the landlord; if you are the tenant, use them to see what the landlord will ask of you.
Comparing similar properties in your area shows you how to position your own, and a prospective tenant will do the same research before calling you. Look at these factors:
Floor space is one of the first details a prospective tenant asks about, so measure everything before you advertise the property. Write down these figures:
Most people cannot picture a space from its measurements alone, so answer these practical questions as well:
The price per square foot starts from the average that similar properties charge, because their floor areas differ and their total rents cannot be compared directly. Adjust that average for your property’s advantages and for costs such as property tax and insurance. The formula is in the next section.
Your asking price means little until a tenant knows whether it already includes the other expenses (gross lease) or leaves them to the tenant (NNN). Say which one applies when you quote the price. FormsPal has templates for both, and the types section above explains the difference.
Pictures of the property serve as both marketing and documentation, because they show its condition before the tenant moves in. Remove furniture and trade fixtures first to open up the space: commercial renters like a blank slate, so they can plan a setup for their own operations.
A real estate agent suits a landlord without commercial leasing experience, because the agent finds tenants and handles the negotiation. A landlord with the time and a business mindset can do both without one.
To advertise it yourself, pick an online platform that accepts commercial listings, or you may get the wrong inquiries. Describe the features you gathered in the earlier steps and add honest, high-quality photos. Before and after pictures, with the empty room beside a mock-up of an office or shop, help a tenant see the possibilities.
When a company shortlists your property, bring a short visual presentation to the meeting. Treating the lease as a business deal tells the prospective tenant that you can offer a stable, long-term arrangement.
A viewing is the next step once a company decides to move forward, and it lets the company test its floor plan against the real space. Walk the company through every area and talk through how the property can fit the layout it wants.
A background check matters because a new company may not have complete papers yet, and its registration can depend on the address it is about to rent. In that case, look into the business and its owners by asking for these items:
Revising the commercial lease agreement means starting from a standard template and adding the terms your tenant’s business needs, once you have discussed each detail together. Common special provisions include:
Ask a lawyer to check the finished draft for errors and loopholes. A commercial lease can last for years, so a mistake in it can last as long.
At signing, the landlord collects the money the lease calls for and gives the tenant written proof of each payment, so that neither side later disputes what was paid. Collect whichever of these your lease calls for:
Issue a receipt or sign a receiving form that gives the amount, the date and what the payment covers.
Turning over the property means handing the tenant’s representative the keys and property documents, then walking through the space together to head off electrical and plumbing problems later. Check that the main electrical panel is clearly labeled, and mention any plumbing detail the tenant should know about, such as a drain that needs a p-trap to stop odors.
The cost per square foot of a commercial space comes from what similar properties charge: work out each one’s price per square foot, average the results, adjust for your own property and multiply by your floor space. Use these formulas in order:
competitor’s rent quotation ($) / competitor’s total floor space (sqft.) = competitor’s price per square feet ($/sqft.)
(Competitor 1’s $/sqft. + Competitor 2’s $/sqft. + Competitor 3’s $/sqft.)/3 = Average $/sqft. in your area
(Average $/sqft.) plus or minus (your adjustment) = adjusted price per square feet ($/sqft.)
adjusted price per square feet ($/sqft.) x your property’s total square feet (sqft.) = total rent for the same period as your quotes
Check the period behind each quote before you compare them. Commercial rents are often quoted per square foot per year, so a yearly figure has to be divided into months before it goes into a lease that charges monthly rent.
Quick example: if three nearby properties charge 20, 24 and 28 dollars per square foot, the average is 24 dollars per square foot. Then raise or lower that figure to reflect your own property.
Sample calculation with made-up figures: an adjusted price of 24 dollars per square foot per year on a 2,000 square foot unit gives 48,000 dollars a year, or 4,000 dollars a month.
Negotiating a commercial lease agreement usually centers on the base rent, expenses, improvements, the deposit, the term and the permitted use. Landlords and tenants can prepare a position on each one:
Tenants should also read the assignment, renewal and default terms closely, since those decide what happens if the business grows, moves or struggles. A lease that both sides consider balanced gives them an easier working relationship over the years ahead.
Before signing, a tenant should check the full cost of occupying the space, the exit terms and any personal liability, because these can outweigh a small difference in base rent. Go through this list with the draft in hand:
A lease longer than one year needs a signed writing, or a signed note or memorandum of it, under the statutes of Colorado, Oregon and South Dakota (Colo. Rev. Stat. § 38-10-108; Or. Rev. Stat. § 41.580; S.D. Codified Laws § 43-32-5). The table below gives the rules we can source for a commercial lease, with the condition each one carries and, for North Dakota, the open question noted under the table.
| State | Rule | Citation |
|---|---|---|
| California | Cal. Civ. Code § 1946.1(a) covers a hiring of commercial real property by a qualified commercial tenant for a term not specified by the parties, so this row does not reach a fixed term set in the lease. For such a hiring, an owner giving notice under this section gives that notice at least 60 days before the proposed termination date if the tenant has occupied the property for one year or more, or at least 30 days if the tenant has occupied it for less than one year. | Cal. Civ. Code § 1946.1(a), Cal. Civ. Code § 1946.1(b) and Cal. Civ. Code § 1946.1(c) |
| Colorado | A contract for leasing for longer than one year is void unless it, or a note or memorandum expressing the consideration, is in writing and subscribed by the party making the lease. | Colo. Rev. Stat. § 38-10-108 |
| Massachusetts | An estate or interest in land created without an instrument in writing signed by the grantor or the grantor’s attorney has the force of an estate at will only. | Mass. Gen. Laws ch. 183, § 3 |
| North Dakota | A political subdivision may not enact, maintain or enforce an ordinance or resolution that would control the amount of rent charged for leasing private residential or commercial property. A lessor of real property or a dwelling may not demand or receive security above one month’s rent, with exceptions, such as up to two months’ rent from an individual convicted of a felony offense as an incentive to rent. | N.D.C.C. § 47-16-02.1 and N.D.C.C. § 47-16-07.1 |
| Oregon | An agreement for leasing for longer than one year is void unless it, or a note or memorandum expressing the consideration, is in writing and subscribed by the party to be charged or that party’s authorized agent. | Or. Rev. Stat. § 41.580 |
| South Dakota | An agreement for leasing real property for longer than one year is valid only if it, or a note or memorandum, is in writing and signed by the lessor or an agent authorized in writing. | S.D. Codified Laws § 43-32-5 |
This table is not a full survey. A state that is not listed can still have its own rule, so ask a local lawyer about your property. The California section defines who counts as a qualified commercial tenant, so read it before you rely on that row. N.D.C.C. § 47-16-07.1 speaks of a lessor of “real property or a dwelling”, so ask a lawyer how its deposit limit applies to a commercial lease in North Dakota.
FormsPal also has commercial lease templates for California, Florida and Texas.
The table below gives a quick overview of the FormsPal commercial lease agreement template, including its other names, the average time to fill it out, the number of fillable fields and the format you can download.
| Document Name | Commercial Lease Agreement Form |
| Other Names | Business Lease Agreement, Lease Agreement for Commercial Property |
| Avg. Time to Fill Out | 18 minutes |
| # of Fillable Fields | 114 |
| Available Formats | Adobe PDF |
Download the free template as a PDF from the block at the top of this page, or create the document online. The steps below follow the FormsPal Commercial Lease Agreement template page by page, so you can check each part of your form against a screenshot.
The screenshots under each step show the FormsPal Commercial Lease Agreement template filled with sample entries in blue, so you can see where each answer goes. The names, addresses, dates and amounts are examples only.
Prefer to type on screen? Complete the PDF with an online PDF editor before you print it.
To sign and use the commercial lease agreement, choose the file format that suits your software, print the agreement, let the tenant review it, and have both parties complete the signature block. Then give each party a signed copy.
These are the questions landlords and business owners ask most often before they sign. Each answer is short, and the sections above give the full detail on leasing, pricing and negotiation.
Yes, a business lease agreement and a commercial lease agreement are the same document under two names. Our form details table lists Business Lease Agreement among the other names of this form.
A commercial lease usually runs for several years, depending on what the business can offer. Our template leaves the length open: Section II takes the term you agree and its beginning and ending dates, so a term of any length fits.
You can see a sample in the How to Fill Out section above, where screenshots show each page of the template with example entries in blue. The names, addresses, dates and amounts in them are examples only.
Use the download block at the top of this page for the PDF, or build the document online.
A commercial lease can need notarization, depending on the state and the deal: our state table above is not a full survey and holds no notarization rule, and our template has no place for it. A state statute, a county office that records the lease or a lender may ask for notarization or witnesses, so ask a local attorney before you sign.
You can start from this template for a restaurant by writing that use in Section IV, then adding the terms a kitchen brings up. Those usually include grease traps and drains, ventilation, pest control, and which party holds which permit.
A commercial pre-lease agreement is a deal to rent a space before it is ready or before the full lease is signed, often while a building is under construction. It usually sets the main terms and the date the space should be ready, and the full lease follows.
General information, not legal or tax advice.
