Commercial Lease Agreement Template and How to Draft One (2026)

What is a commercial lease agreement? A commercial lease agreement is a written contract that lets a business occupy premises, such as an office, shop, warehouse, or restaurant space, in return for rent. It is usually longer and more detailed than a residential lease, because the stakes are higher: fit-out costs, business continuity, and sometimes a share of building outgoings all ride on the terms. A good commercial lease pins down rent and escalation, the term and any renewal option, who pays for repairs and taxes, what the tenant may do with the space, and how either side can exit. Commercial leases are heavily shaped by local law and by how rent is structured (gross, net, or percentage), so the template below is a strong starting point, not a one-size-fits-all document. For a lease of any real value, have a lawyer review it against the law where the premises sit. ## A commercial lease agreement template you can copy ```

COMMERCIAL LEASE AGREEMENT This Lease is made on [date] between: Landlord / Lessor: [legal name], [address], [contact] Tenant / Lessee: [legal name], [registration number], [address], [contact] 1. PREMISES The Landlord leases to the Tenant the premises at [full address], measuring approximately [area] [sq ft / sq m], as shown in Schedule A, together with [parking, common-area access]. 2. PERMITTED USE The premises may be used only for [specific business use, e.g. retail sale of apparel]. The Tenant will obtain and maintain all licences and permits for that use. 3. TERM AND RENEWAL The term is [X] years, from [start date] to [end date], with an option to renew for a further [Y] years on [notice period] written notice, at rent set per clause 4. 4. RENT, ESCALATION AND OUTGOINGS Base rent is [amount] per month, payable in advance by the [5th]. Rent escalates by [X percent] every [12 months]. The Tenant also pays [its share of maintenance / common-area charges / property tax], as set out in Schedule B. Rent type: [gross / net / percentage]. 5. SECURITY DEPOSIT The Tenant pays a deposit of [amount, e.g. 3 to 6 months rent], refundable within [45 to 60] days of handover, less lawful deductions with an itemised statement. 6. FIT-OUT AND ALTERATIONS The Tenant may carry out [approved fit-out] per approved plans. Structural changes need the Landlord's written consent. On exit, the Tenant will [remove fit-out and restore / leave as is] per clause 11. 7. REPAIRS AND MAINTENANCE The Landlord maintains the structure, roof and common areas. The Tenant maintains the interior and its own installations. [Specify any service charge arrangement.] 8. ASSIGNMENT AND SUBLETTING The Tenant may not assign or sublet without the Landlord's prior written consent, which will not be unreasonably withheld. 9. INSURANCE AND INDEMNITY The Tenant insures its contents and public liability for at least [amount]. Each party indemnifies the other for loss caused by its own breach or negligence. 10. LOCK-IN AND EARLY EXIT Lock-in period: [X] months. Early exit before lock-in attracts [stated consequence]. After lock-in, either party may exit on [3 to 6 months] written notice. 11. HANDOVER AND REINSTATEMENT On exit, the Tenant clears dues, removes its goods, and hands back the premises in the condition at handover, fair wear and tear excepted. 12. DEFAULT AND TERMINATION Rent unpaid beyond [15 days], or an unremedied breach after [30 days] written notice, allows the Landlord to terminate and re-enter, subject to law. 13. GOVERNING LAW AND DISPUTES Governed by the laws of [state or country]; disputes resolved by [arbitration at ___ / courts at ___]. Signed: For the Landlord: ____________ For the Tenant: ____________ Witness 1: ______________ Witness 2: ______________ SCHEDULE A: Floor plan and area SCHEDULE B: Outgoings, service charge and escalation table

- **Get the rent structure right.** State whether rent is gross (landlord covers outgoings), net (tenant pays a share of taxes, insurance, maintenance), or percentage (common in retail, a base plus a share of turnover). This single choice drives the real cost.
- **Set a clear escalation.** A fixed percentage every 12 months is common and easy to budget. Avoid open-ended review language.
- **Handle fit-out and reinstatement up front.** Say who pays for fit-out, what approvals are needed, and whether the tenant must restore the space on exit. Reinstatement costs surprise many tenants.
- **Balance lock-in and notice.** A lock-in protects the landlord's income; a fair early-exit route and a sensible notice period protect the tenant. ## Commercial vs residential: what changes | Feature | Commercial lease | Residential lease |
|---|---|---|
| Term | Often 3 to 9 years | 11 to 12 months |
| Rent structure | Gross, net or percentage | Usually a flat monthly rent |
| Outgoings | Tenant often shares taxes and service charge | Mostly on the landlord |
| Fit-out | Significant; reinstatement matters | Minimal |
| Deposit | Often 3 to 6 months | 1 to 3 months |
| Negotiation | Heavily negotiated, clause by clause | More standardised | ## Stamp duty, registration and enforceability vary by jurisdiction Commercial leases are formal documents, and the step that makes them enforceable differs by location. - **India.** Stamp duty on a commercial lease depends on the state, the rent, and the term, and longer leases generally require registration. These costs can be significant, so budget for them.
- **United Kingdom and others.** Commercial tenancies follow their own statutory framework, including rules on security of tenure and rent review that can differ sharply from residential rules. So confirm the stamping, registration, and security-of-tenure position where the premises are located. *This template is general information, not legal advice. A commercial lease carries real financial exposure; have a qualified lawyer review it before you sign.* ## Where a contract workspace helps A commercial lease is where obligations surface years later: a long term, an escalation schedule, a service-charge share, a lock-in, a renewal option, and reinstatement duties that are easy to forget. Drafting, reviewing, tracking and governing a commercial lease can live in one AI workspace tuned to how your business leases space, with one-sided or missing clauses flagged and the escalation dates, renewal-option deadline and exit notice kept where you will see them. [Adira](https://adiralaw.com) is one tool built around that single-workspace idea for property contracts like a commercial lease. The template above is enough to prepare a draft on its own.