Real Estate Law · Haute Lawyer Network
What Is a Commercial Lease?
Last reviewed: June 2026
A commercial lease is a binding agreement between a landlord and business tenant for rental of commercial property — office, retail, industrial, or warehouse space. Unlike residential leases heavily regulated by consumer protection laws, commercial leases are largely governed by contract law — the negotiated terms control, and tenants have limited statutory protections. This makes careful negotiation and legal review essential. Lease types include gross lease — tenant pays fixed rent, landlord pays all operating expenses; net lease — tenant pays base rent plus some or all operating expenses, with triple net (NNN) being most common in commercial real estate; and modified gross lease — a hybrid. Key terms to negotiate include lease term and renewal options, permitted use, assignment and subletting rights, personal guarantee requirements, tenant improvement allowance, rent escalation, and early termination rights.
Frequently Asked Questions
Do I need an attorney to review a commercial lease?
Yes. Commercial leases are complex documents — often 30-60 pages — creating significant long-term financial obligations.
What is a personal guarantee?
Makes the business owner personally liable for lease obligations if the business fails. Negotiate a limited or burn-down guarantee to limit personal exposure.
What is a tenant improvement allowance?
Money the landlord contributes to build out the space to the tenant's specifications.
Can I get out early?
Only if the lease provides for it through an early termination clause. Breaking a lease without contractual authority results in liability for remaining rent.
What is a radius restriction?
Prevents the tenant from opening another location of the same business within a specified distance — protecting the landlord's rent revenue.
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