Commercial Leases: What Businesses Need to Know Before Signing

As more businesses return to the office and reassess their space requirements, commercial leasing has once again become a central strategic decision. In high-cost markets such as Dublin, where demand remains strong and rents are among the highest in the country, understanding lease structure, cost exposure and flexibility is essential. 

This practical guide is designed for business owners and decision-makers evaluating office space. It is not legal advice, but it outlines the key terms, cost considerations and strategic factors to understand before signing a lease.

A well-structured lease should support your business strategy, not limit it. 

What Is a Commercial Lease? 

A commercial lease is a legally binding agreement between a landlord and a business tenant that grants the right to occupy a property for commercial purposes over an agreed period. 

Unlike residential tenancies, commercial leases are typically more detailed and negotiable. They outline not only rent, but also responsibilities for maintenance, insurance, service charges, rent reviews, and end-of-term obligations. 

Understanding lease structure early in the process is critical for: 

• Cost control – ensuring clarity over total occupancy expenses 

• Risk management – identifying long-term financial commitments 

• Strategic planning – aligning property commitments with growth forecasts 

Commercial property is often one of the largest fixed costs a business carries. Taking the time to understand how a lease works enables more confident and informed decision-making. 

Common Types of Commercial Leases 

The type of lease you enter into has a direct impact on cost responsibility, operational control and flexibility. Each structure suits different business needs. 

Full Repairing and Insuring (FRI) Leases 

An FRI lease places responsibility for repairs, maintenance and insurance largely with the tenant. In many cases, this includes both internal upkeep and contributions towards building structure and common areas. 

Best suited for: Established businesses seeking long-term stability and greater control over their premises. 

FRI leases can provide security of tenure and potentially lower base rent. However, businesses must factor in the broader maintenance and reinstatement responsibilities that accompany this structure. 

Gross and Modified Gross Leases 

Under a gross lease, many building-related costs are incorporated into the rent. A modified gross lease shares certain responsibilities between landlord and tenant. 

Best suited for: Businesses looking for greater predictability in monthly outgoings while retaining a more traditional lease structure. 

These arrangements can simplify budgeting, though it remains important to review what is and is not included within the rent. 

Flexible Office Leases 

Flexible or serviced office agreements provide ready-to-use workspace on shorter-term commitments. Utilities, cleaning, reception services and maintenance are typically bundled into a single monthly fee. 

Best suited for: Growing businesses, hybrid teams, project-based operations or companies prioritising agility. 

Flexible agreements reduce administrative complexity and can align more closely with evolving headcount needs. 

Key Terms You’ll Find in a Commercial Lease 

Key lease term	What it means	Why it matters for your business
Lease length and break clauses	The lease length is how long you’re committed to the space. Break clauses are options that let you end the lease early, usually at set dates and under specific conditions.	These terms determine how locked-in you are. A long lease without breaks can limit flexibility if your business grows, shrinks, or relocates. Aligning lease length and break options with your growth plans and exit strategy helps reduce long-term risk.
Rent reviews and escalation clauses	These clauses explain if, when, and how rent can increase during the lease—such as fixed increases, inflation-linked rises, or market rent reviews.	Rent may look affordable at the start but become expensive later. Understanding how rent changes is essential for budgeting, forecasting cash flow, and avoiding surprise cost jumps mid-lease.
Repair, maintenance, and dilapidations	These terms define what you must maintain during the lease and what condition you must return the property in at the end, including repairs and reinstatement works.	Misunderstanding these obligations can lead to large, unexpected costs—especially at lease end. Some tenants are responsible for extensive repairs that can run into tens or hundreds of thousands.
Service charges and operating costs	Service charges are ongoing fees for shared services like cleaning, security, lifts, heating systems, and common area maintenance. They are usually billed annually or quarterly.	Service charges can significantly increase the true cost of occupying a space. Reviewing what’s included and how costs are calculated helps you avoid underestimating total occupancy expenses.

Understanding the True Cost of a Commercial Lease 

The headline rent rarely reflects the full cost of occupying office space. 

Fit-Out and Refurbishment Costs 

Traditional leases often require tenants to fit out the space to suit operational needs. This may include: 

• Internal partitions and meeting rooms 

• IT infrastructure and cabling 

• Furniture and finishes 

• Branding and signage 

Depending on negotiations, landlords may offer incentives or contributions, but tenants should be prepared for capital expenditure before moving in. 

Business Rates, Utilities and Insurance 

Additional ongoing costs may include: 

• Business rates 

• Electricity and heating 

• Broadband and telecoms 

• Insurance contributions 

These recurring expenses should be incorporated into occupancy budgets from the outset. 

Additional Cost Factors 

Other considerations may include: 

• Legal and surveying fees 

• Rent deposits or guarantees 

• Potential dilapidation provisions 

• Service charge fluctuations 

When assessed holistically, these factors determine the true cost of a traditional lease. 

By contrast, serviced office models often bundle many of these costs into a single transparent monthly fee, reducing administrative burden and upfront capital expenditure. 

What Businesses Should Consider Before Signing 

Space Requirements and Future Growth 

Accurately assessing space needs is essential. Businesses should consider current headcount, hybrid working policies and realistic growth projections over the lease term. 

Committing to too much space can reduce efficiency, while underestimating future growth may limit expansion options. 

Location, Accessibility and Amenities 

Location plays a key role in talent attraction, client access and operational efficiency. Proximity to transport links, restaurants and commercial hubs can enhance employee experience and client perception. 

Workspaces in central Dublin business districts — such as those offered by Iconic Offices — provide access to established commercial areas and strong transport connectivity. 

Flexibility vs Long-Term Security 

Traditional leases offer stability and long-term presence. For established organisations with predictable growth, this can be advantageous. 

However, for growing businesses, restructuring or hybrid working models, flexibility may be equally valuable. Serviced office agreements offer shorter commitments and the ability to scale workspace requirements as needs evolve. 

Brand Image and Client Perception 

An office address and environment contribute to how your organisation is perceived. In competitive markets such as Dublin, a professional setting within a recognised business district can enhance credibility and employee satisfaction. 

Key Considerations in Today’s Market 

1. Long-Term Financial Commitments 

Multi-year leases require confidence in headcount forecasting and financial planning. In Dublin’s high-cost rental market, aligning lease length with realistic growth projections is particularly important. 

Flexible workspace models can provide an alternative for businesses seeking shorter-term commitments while maintaining a central presence. 

2. Limited Exit Options 

Break clauses, subletting rights and assignment conditions shape how easily a business can adapt if circumstances change. Reviewing these provisions carefully ensures the lease supports — rather than restricts — future decisions. 

3. Market Fluctuations and Rent Reviews 

Rent review mechanisms reflect broader market dynamics. In strong markets, this may result in upward adjustments over time. Understanding how reviews are structured enables more confident long-term budgeting. 

Serviced office arrangements typically provide clearer short-term pricing structures, reducing exposure to mid-term market adjustments. 

Why Flexible, Serviced Offices Simplify Commercial Leasing 

Traditional leases remain a strong option for businesses seeking long-term stability and control. However, flexible workspace models have become increasingly attractive as organisations prioritise agility and predictable costs. 

Serviced offices simplify commercial leasing by: 

• Bundling utilities and services into one monthly fee 

• Reducing fit-out requirements 

• Limiting long-term contractual commitments 

• Minimising repair and reinstatement obligations 

• Streamlining the legal process 

Flexible workspaces like Iconic Offices support businesses through this simplified approach, offering ready-to-use spaces, transparent pricing and shorter commitments designed to align with evolving business needs. 

A commercial lease should ultimately function as a strategic asset — providing the right environment, financial clarity and flexibility to support your organisation’s long-term success. By understanding the structure, costs and commitments involved, decision-makers can approach the leasing process with confidence and clarity.