Common Commercial Lease Types in Texas

 Posted on April 08, 2025 in Real Estate Law

Commercial leases, like residential leases, involve the rental of property by a tenant from a landlord. Many of the similarities end there, however. Commercial lease agreements are vastly different from residential lease agreements, particularly in that they offer multiple ways of structuring the payment of rent. This allows the parties more room to negotiate terms and tends to help keep the tenant in the space for a longer period—which generally speaking is in the best interest of both tenant and landlord in a commercial lease. Whether considering a gross lease, percentage lease, or net lease, commercial tenants and landlords should familiarize themselves with the various types of commercial lease agreements to find the right fit for their business by speaking to an experienced Hill County, TX commercial real estate lawyer.

How Is a Commercial Lease Different from a Residential Lease?

Besides the flexibility to structure payment of the lease in different ways, a commercial lease differs from a residential lease in several ways. Commercial leases tend to last for a longer period, providing stability for the parties but also a more significant commitment. Also, in some commercial leases, the tenant is responsible for paying property taxes and a portion of the building’s operating costs. Finally, tenants have fewer protections in commercial leases than they do in residential leases and may find it harder to break the lease without consequences. 

What Commercial Leases Are Available in Texas?

Net Lease

In a net lease, the tenant pays some of the building’s operating costs along with a base rent. Net leases come in three varieties: single net, double net, or triple net (NNN), depending on the additional payment obligations under each lease type, like insurance and maintenance. For the tenant, net leases can be advantageous since the overall rent might be cheaper if the landlord does not have to factor in operating expenses over the long term. For a landlord, the net lease can allow them to charge for the actual operating costs rather than having to estimate operating costs. 

Gross Lease

In a gross lease, a tenant pays one flat annual fee, similar to how a residential lease is structured. The landlord estimates and factors operating expenses into the rent amount. This type of lease can be good for tenants because it offers the stability of knowing what the rent will be, although they may end up paying more in the long term. For landlords, this type of lease may be a good idea if they can accurately predict the operating expenses to ensure the annual fee covers their costs.

Percentage Lease

In a percentage lease, the tenant pays a base rent, operating expenses, and a monthly percentage of gross sales. If they can negotiate a lower base rent, this lease can be a good idea for tenants. Landlords in desirable retail spaces can also benefit from percentage leases, as they are likely to receive a lower base rent but would make up for that with a tenant who runs a successful business.  

Call a Hill County, TX Commercial Real Estate Lawyer

Whether you are a landlord seeking to rent out your commercial space or a tenant looking for the perfect space for your brick-and-mortar storefront, the experienced Hood County, TX commercial real estate lawyers at Cain & Kiel Law are available to negotiate the best terms for your commercial lease. Contact our offices at 817-645-1717 for a private consultation.