Commercial Lease Fundamentals

Are you thinking about leasing some space for your business? 

Make sure to learn all the commercial lease fundamentals that you can so you make the best decision possible.

Signing a commercial lease is a big deal because it’s a large expense for the business. The location of your business is also one of the biggest success factors that you have to consider.

Knowing the commercial lease fundamentals is a great start, but you should also plan on having expert tenant representation.

Some basic commercial lease information

  • Parties- Remember that either party may have a legal name and trade name, due to it being a commercial lease, and may have changed names throughout the course of the lease.
  • Term- A lease begins on the effective date but the term starts on the commencement date. This means you have to also understand the effect of a delayed commencement and definition of a full calendar month.
  • Premises- A commercial lease using multiple names, suite numbers, or in measurements. Therefore, you have to clearly identify the space using the terms and numbers from the leases.
  • Type- Office, Retail, Industrial, Storage, Telecom, other all have
    their own trends and items deserving special attention.
  • Base rent-  Given in annual, monthly or dollar/SF amounts.

Complete tenant representation- commercial lease experts

Navigating a commercial lease can be a challenge. We are here to help our tenants gain the best terms possible in the best locations. Take a look at our complete guide on commercial leasing terms so you can better understand a commercial lease.

Please contact us with any questions.

Commercial lease-rent glossary

  1. Full Gross: all recoveries are
    included in rent.
  2. Gross Lease: the base amount
    included in year one.
  3. Net Lease: expenses paid
    with no base amount.
  4. Pro Rata Share: premises
    SF/Bldg SF.
  5. Recoveries: costs paid by
    LL, repaid by the tenant. Also
    known as additional rent.
  6. Management Fees: the amount
    charged by LL for operating
    the building in addition to
    actual costs.
  7. Base Year: the amount of
    additional rent during a
    the calendar used as a baseline
    for charging additional rent in
    ensuing years.
  8. Expense Cap: restriction on
    annual increases.
  9. Capital Expenditures:
    an expense of LL that is
    sometimes included and
    sometimes excluded from
    reimbursable operating
  10. Consumer Price Index:
    an index which serves to
    increase base or additional
  11. Percentage Rent: tenant
    pays to LL a percentage of
    gross sales.
  12. Porters Wage: an index
    which serves to increase
    base or additional rent.
  13. Gross-Up: artificial increase
    in the operating expenses
    that vary with occupancy.
    Usually 95% or 100%.

Learn more about David Lester on LinkedIn.