The short version
Every commercial lease answers one question: who pays for the building? Rent can be a single all-in number (gross), a base amount plus the tenant's share of taxes, insurance and operating costs (net or triple-net), something in between (modified gross), or a base amount plus a slice of sales (percentage rent). A ground lease goes further and leases only the land, leaving the tenant to build and own the improvements for the term.
The labels are not legal categories. Nothing in BC legislation defines "triple-net" or "modified gross", so two leases with the same label can allocate costs very differently. The only reliable answer is in the lease's definitions of rent, additional rent and operating costs. Read those first.
Lease types compared
The Business Development Bank of Canada's plain-language definitions are a useful starting point (BDC). The table below uses those definitions and adds what each structure means in practice for a BC landlord and tenant.
| Lease type | What the tenant pays | Who carries cost increases | Key thing to check |
|---|---|---|---|
| Gross | One rent amount that covers base rent and building expenses | Landlord, unless the lease adds an escalation clause | Whether rent can rise if taxes or operating costs rise |
| Modified gross | Base rent plus some expenses (for example, utilities or increases over a base year) | Shared, as the lease specifies | Exactly which costs are passed through, and any base year |
| Net / double-net | Base rent plus one or two named expenses, often property tax and insurance | Tenant for the named items; landlord for the rest | Which expenses are named; the rest stay with the landlord |
| Triple-net (NNN) | Base rent plus property tax, building insurance, utilities and operating and maintenance costs | Mostly tenant; landlord usually keeps structural and capital items unless the lease shifts them | Whether capital, structural and roof costs are excluded |
| Percentage rent | Base rent plus a percentage of gross sales above a threshold | Tenant still pays additional rent; landlord shares upside of strong sales | How gross sales and the threshold (breakpoint) are defined; audit rights |
| Ground lease | Rent for the land only; tenant builds, owns and maintains improvements for the term | Tenant for almost everything | Term length, rent resets and what happens to buildings at expiry |
Some leases go further still (sometimes called "absolute net") and make the tenant pay for structural and capital repairs as well. If a lease makes the tenant responsible for the roof, foundation or major systems, that is a negotiation point, not boilerplate. See negotiating a commercial lease in BC.
Basic rent and additional rent
In a net lease, the rent a tenant actually pays has two parts.
- Basic (base or minimum) rent is the fixed amount set in the lease, usually quoted per square foot per year and often stepping up on set dates.
- Additional rent is everything else the lease makes payable: the tenant's share of operating costs, common area maintenance (CAM), property taxes, insurance, and often a management or administration fee. Leases often have the tenant pay it monthly on an estimate, reconciled to actual costs after year-end; check whether the tenant can audit the reconciliation.
Additional rent is not a small line item. In Avison Young's Q1 2026 Metro Vancouver industrial report, the average asking net rent was $19.81 per square foot, and that figure excluded an average of $7.07 per square foot in additional rent (Avison Young). A tenant comparing spaces on net rent alone can misjudge total occupancy cost by a wide margin. The mix and level of additional rent differ by building and region, so ask each landlord for the current year's estimate and the last two years of reconciled actuals.
What usually goes into operating costs
- Property taxesLevied on the whole property and passed through by share of area. Commercial property is mostly in BC Assessment's Class 6 (Business and Other), and light industrial property in Class 5 (Province of BC). Ask for the current tax notice rather than estimating.
- InsuranceThe landlord's property and liability insurance. Tenants still need their own contents and liability coverage.
- CAMSnow removal, landscaping, janitorial for common areas, parking lot upkeep, common utilities and similar shared costs (BDC).
- Repairs and maintenanceRoutine work on building systems. Whether capital replacements (roof, HVAC units, paving) are included, amortized or excluded depends entirely on the lease wording.
- Management or administration feeOften expressed as a percentage of operating costs or of gross rent. Check what it is calculated on, and whether it applies to property taxes as well.
Commercial rent and additional rent are generally taxable supplies for GST purposes, so a GST-registered landlord adds 5% GST to both (CRA GST/HST Memorandum 19.4.1). GST treatment of inducements and lease payments is covered in the negotiating guide.
How rent is quoted and how space is measured
Commercial rent in BC is normally quoted as dollars per square foot per year, net (for example, "$18.00 psf net plus additional rent"). To get the monthly base rent, multiply the rate by the rentable area and divide by 12. Some listings quote gross rates, and some quote in square metres; confirm which before comparing.
Rentable vs usable area
- Usable area is the space the tenant physically occupies.
- Rentable area is usable area plus a proportionate share of common areas such as lobbies, corridors, washrooms and mechanical rooms. The ratio between the two is often called the load factor or gross-up.
Two suites with the same usable area can have different rentable areas in different buildings. Ask for the load factor in writing when comparing offices.
BOMA measurement standards
Many commercial leases define area by reference to a Building Owners and Managers Association (BOMA) International standard. BOMA publishes separate standards by property type, and several have been updated recently (BOMA International):
| Property type | Current BOMA standard | Previous edition |
|---|---|---|
| Office | BOMA 2024 for Office Buildings (ANSI/BOMA Z65.1-2024) | 2017 |
| Industrial | BOMA 2025 for Industrial Buildings (ANSI/BOMA Z65.2-2025) | 2019 |
| Retail | BOMA 2025 for Retail Properties (ANSI/BOMA Z65.5-2025) | 2020 |
| Mixed-use | BOMA 2026 for Mixed-Use Properties (ANSI/BOMA Z65.6-2026) | 2021 |
| Multi-family and hospitality | BOMA 2023 (ANSI/BOMA Z65.4-2023) | 2010 |
Useful questions: which standard and edition does the lease use; was the premises measured by a qualified measurer or taken from old drawings; can the area be remeasured, and if so does rent change in both directions? A new edition of a standard can produce a different number for the same space.
Registering a lease under BC's Land Title Act
Lease length has consequences under the Land Title Act:
- Unregistered leases. Section 20(1) says an unregistered instrument affecting land does not pass an interest in the land except against the person who made it. Section 20(3) makes an exception for a lease or agreement for lease with a term not exceeding three years if there is actual occupation under it. A tenant under a longer lease who does not register is exposed if the property is sold or refinanced.
- Leases of part of a parcel. Section 73(1) prohibits subdividing land for the purpose of leasing it for life or for a term exceeding three years, except in compliance with Part 7 of the Act (subdivision approval and plans). Section 73(3) says this restriction does not apply to leasing a building or part of a building (Land Title Act, Part 7). Section 73.1 adds that a lease of part of a parcel is not unenforceable between the landlord and tenant only because it does not comply with Part 7.
- Renewal options count. A BCREA legal commentary notes that where a lease includes renewal options, the combined term must not exceed three years for the lease to be treated as short-term (BCREA Legally Speaking #32).
Registration, including any plan needed to describe the leased area, is lawyer or notary work. It matters most for long terms, significant tenant improvements, ground leases and anything a lender will finance.
Leases of reserve land follow different rules. On Westbank First Nation lands near West Kelowna, for example, leaseholds, mortgages and other interests are registered through the Westbank Lands Office and the Self-Government First Nation Lands Registry, not the BC Land Title Office (Westbank First Nation).
Ground leases
In a ground lease the landlord keeps the land and the tenant builds. Terms are long enough to let the tenant finance and recover the cost of construction, and the key questions are different from a space lease:
- What happens to the buildings at expiry: do they revert to the landlord, must the tenant remove them, or is there compensation?
- How is ground rent reset over the term (fixed steps, CPI, or periodic reappraisal of the land)?
- Can the tenant mortgage the leasehold, and does the lease give a lender notice and cure rights?
- Can the leasehold be subdivided into strata lots? BC's Strata Property Act has a separate part (Part 12) for leasehold strata plans (Strata Property Act).
Before buying or financing a leasehold interest, ask the lender and an accredited appraiser how the remaining term affects value and loan terms.
Which law applies to a commercial lease in BC
BC's Residential Tenancy Act does not govern commercial space. It expressly does not apply to living accommodation included with premises that are primarily occupied for business purposes and rented under a single agreement (Residential Tenancy Act, s. 4), which matters for live-work and mixed-use buildings. A commercial lease is mainly a contract, supplemented by the common law and the Commercial Tenancy Act, an older statute that deals with matters such as recovering rent and overholding tenants.
Default, distress for rent and tenant insolvency are covered in depth on the sister site's guide to commercial tenant default and remedies in BC; the legal framework it describes applies to commercial tenancies generally.
How Commercial Real Estate Group can help
Sean Phillips, REALTOR® with Coldwell Banker Executives Realty, represents landlords and tenants on commercial leases across BC, including comparing net and gross offers on a total-occupancy-cost basis. See commercial leasing services or book a free 10-minute Zoom intro. Lease drafting and registration should always go to a BC lawyer.