Signing a commercial lease is one of the biggest commitments a business makes — often a five- or ten-year obligation with real financial consequences. Yet many tenants focus only on the base rent and miss the terms that actually determine what they’ll pay and how much flexibility they’ll have. Here’s a plain-English primer on commercial leasing in the GTA.
Base rent is only half the story
In almost every commercial lease, your total occupancy cost has two parts:
- Base rent (sometimes “net rent” or “minimum rent”) — the headline rate per square foot
- Additional rent — your share of the building’s operating costs, most commonly bundled as TMI
Quoted a “$22 per square foot” space? Always ask the next question: is that net or gross, and what’s the TMI?
Net vs. gross leases
Net leases
In a net lease, the tenant pays base rent plus additional costs. The most common form in the GTA is the triple net (NNN) lease, where the tenant covers:
- T — property taxes
- M — maintenance and common area costs (CAM)
- I — building insurance
You’ll also hear “single net” and “double net,” which pass through fewer of those costs, but triple net is the GTA standard for retail and industrial. With a net lease the base rent looks low — but TMI can add anywhere from a few dollars to well over the base rate, per square foot.
Gross leases
In a gross lease (common in office), most operating costs are bundled into one rate. It’s simpler and more predictable for the tenant, though landlords build their cost estimates into the number. Watch for the difference between a full-service gross lease and a “modified gross,” where some costs are still passed through.
The most expensive mistake tenants make is comparing a net rate at one building to a gross rate at another. Always compare the fully-loaded gross occupancy cost — base rent plus TMI — per square foot.
Understanding TMI
TMI stands for Taxes, Maintenance and Insurance — the landlord’s recoverable operating costs, divided among tenants by their share of the building. A few things to scrutinize:
- Ask for a TMI breakdown, not just a single lump number
- Watch for management fees and capital costs bundled into maintenance
- Year-end reconciliations — TMI is usually estimated, then trued-up; you could owe more or receive a credit
- Measurement matters — confirm whether you’re paying on usable or rentable area (rentable includes a share of common space through a “gross-up”)
What to actually negotiate
Base rent gets the attention, but the real wins are often elsewhere. Come to the table on:
- Free rent — a fixturing or rent-free period to build out and open before rent starts
- Tenant improvement / leasehold allowance — a landlord contribution toward your build-out, often quoted per square foot
- Term and renewal options — a renewal option at a pre-agreed or market rate protects you from being forced out or gouged later
- Rent escalations — know exactly how and when base rent steps up over the term
- Use and exclusivity clauses — for retail, exclusivity can stop a direct competitor from moving in next door
- Assignment and subletting rights — flexibility to transfer the lease if you sell the business or need to move
- Demolition and relocation clauses — landlord-friendly clauses you’ll want to limit or remove
- Personal guarantees and deposits — negotiate the size and duration; everything is on the table
Before you sign: a tenant’s checklist
A few final checks save expensive surprises down the road:
- Confirm the permitted use and zoning for your business — don’t assume the space is approved for what you actually do
- Model the all-in cost per square foot over the full term, including escalations and estimated TMI increases, not just year one
- Read the restoration clause — you may be required to return the space to its original condition when you leave
- Clarify who maintains the HVAC and whether you’re responsible for major repairs or full replacement
These details rarely make the headline rate, but they quietly shape what the lease really costs you.
Landlords: the other side of the table
If you own commercial space, the lease is your most valuable asset-protection tool. The right tenant, lease structure and covenants minimize vacancy and protect long-term value. We represent landlords too — qualifying tenants, structuring terms, and retaining good tenants through smart renewals as part of our commercial leasing service.
Location still drives the deal
Rents, TMI ranges and availability vary dramatically by node. Office, retail and industrial demand in Toronto looks very different from the suburban markets of Mississauga or Vaughan — and if your longer-term plan is to own rather than rent, our commercial sales team can model buying versus leasing.
Get the lease right the first time
A commercial lease is too important — and too long — to sign without expert eyes on it. We help GTA tenants and landlords understand the true cost, negotiate the terms that matter, and avoid the clauses that bite later. Reach out through our contact page and we’ll walk through your space or your lease line by line. Daniel and Heather both prefer a text, so message us anytime with the details.