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How to Review a Commercial Lease: Lease Comparisons

Types of Commercial Property

Leisure types of commercial property includes hotels and hospitality offering both short-and long-term accommodations to travelers, both for leisure or business purposes.

Commercial office building landlords frequently find themselves leasing to health care provider tenants. A landlord may not consider doctor’s offices or diagnostic labs as specialty uses, but there are several lease provisions that may warrant special attention when a tenant is a medical service provider. 

Types of Lease Agreements

A landlord has the option of several different commercial real estate lease types when renting out space depending on the type of commercial property is in question. Depending on the type of lease agreed upon, the tenant may also be obligated to pay its share of property taxes, property insurance premiums and/or common area maintenance costs and other maintenance costs. 

Reviewing a commercial lease requires attention to detail and considering the responsibilities of both parties. Who will be responsible for paying property taxes and insurance? Who will pay for utilities? Who will cover maintenance expenses? Understanding the nuances between each type of commercial lease will help you review more effectively. 



Single Net Lease or Net Lease: a commercial lease agreement where tenant only pays utilities and property tax; landlord pays maintenance, repairs and insurance.


Double Net Leases: a lease agreement where tenant is responsible for only utilities, property taxes and insurance premiums for the building; landlord pays maintenance & repairs. 

Triple Net Leases: a commercial lease agreement where the tenant is responsible for all costs of the building, except the landlord is generally responsible for structural repairs.

Absolute net lease: the tenant is responsible for rent and all other property related expenses.  This lease agreement relieves the landlord of all financial obligations. An absolute net lease is a variation of the triple net lease that is used when the landlord has borrowed money to finance the commercial property and opts to put additional risks in the hands of the tenant.

Percentage leases: requires the tenant to pay the landlord a portion of the gross revenues generated from the tenant’s business in addition to their base rent amount. 

Full Service Gross or Modified Gross Lease: these lease agreements split structural repairs and operating expenses between the tenant and landlord called base rent.


Modified gross lease: tenant pays base rent at the lease's inception, but it takes on a proportional share of some of the other costs associated with the property as well. This type of lease typically falls between a gross lease, where the landlord pays for operating expenses, and a net lease, which passes on property expenses to the tenant.

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