Important Elements of an Office Lease

There are several types of commercial real estate leases and the necessary or important elements of an office lease or other lease within these groups will vary.  In each case, a landlord is defined as a person who owns and rents out the office space, and a tenant is defined as the person renting the space.  A lease is defined as the contract between a landlord and a tenant. 

Understanding the Types of Office Lease

The first key to signing an office lease is to determine what type of lease is right for you. There are several types you should consider:

• “Gross Lease” – In this lease, a tenant pays rent to the landlord.  The landlord in turn pays all costs associated with the property, including property taxes, commercial property insurance, municipal bills like sewer, utilities, and other expenses.

• “Net Lease” – In this lease, a tenant pays rent to the landlord, plus a portion of the costs associated with operating the property, including insurance, taxes, utilities, etc.

• “Triple-Net Lease” – In this lease, the tenant pays for all of the property’s expenses, again including but not limited to property taxes, insurance, municipal bills, and more.

• “Shopping Center Lease” – In this lease, a tenant pays a rate based on the overall size of a commercial space.  For example, if you are renting space in a mall or a shopping plaza, you will most likely be expected to:Pay a fee based on the square footage of your store

• Pay a fee toward common areas of the mall or plaza
• Pay a fee based on a portion of your overall sales
• Agree to particular signs for your store, operating hours, shipments to your store, etc.
• Agree that the landlord has the right to relocate you

• “Land Lease” – With this lease, the tenant rents the ground upon which s/he (the tenant) then builds.  In this case, all building, improvements, etc. go back to the landlord after the lease ends.

What Your Office Lease Should Contain

Within each of these leases, elements will vary.  Leases can include clauses regarding office space, retail space, storage space, etc.  In general, leases will include the following information: 

• Names and addresses of both landlord and tenant
• Terms regarding payment of rent, including amount due, due dates, late fees, bounced check fees, and with some leases, other fees due
• Liability of the landlord, or tenant, for damages to property, etc.
• When and how new leases are to be signed or negotiated
• Who is permitted to utilize the commercial office space, and for what purpose.

Getting Help

When entering into such agreements, landlords and especially tenants are encouraged to read leases closely and be prepared to negotiate various elements of the lease. An experienced commercial real estate attorney can assist you in doing this and in ensuring your rights are protected in any lease agreement you sign.