Residential leases often run a year. Commercial leases commonly run five, ten or more. The difference comes from who pays to make a space usable.
Fit-out cost drives the term
Commercial space is usually delivered as a shell. Partitions, electrical distribution, finishes and specialist equipment are installed for a particular tenant's use.
That work costs a substantial sum and mostly cannot be removed and reused elsewhere, so whoever pays for it needs enough occupancy to recover the outlay.
A short term would mean amortising the same investment over a fraction of the time, making the effective monthly cost of the space far higher.
Landlord contributions extend the commitment
Landlords frequently contribute toward fit-out through an improvement allowance, and sometimes offer months of free rent at the start of a term.
Those concessions are recovered through the rent paid over the whole term, which means the landlord also requires length to make the arrangement work.
The headline rent therefore understates what a tenant is actually paying, since concessions granted at the beginning are priced into the years that follow.
Rent review replaces renegotiation
A long term would leave rent stale, so leases include mechanisms adjusting it over time, whether by fixed steps, an index, or periodic review to market levels.
This lets the parties commit to the length without committing to a price for its entirety, which is what makes a decade-long agreement tolerable to both.
The choice of mechanism is heavily negotiated, since it determines who carries the risk of the market moving in either direction.
Operating costs are usually passed through
Many commercial leases require the tenant to pay a share of property taxes, insurance and maintenance in addition to base rent.
Arrangements vary from full pass-through to structures where the landlord absorbs some costs, and the terminology differs between markets.
Because these charges fluctuate, a tenant's total occupancy cost is not fixed even where the base rent is, which is a common source of dispute.
Exit routes are negotiated in advance
Since committing for a decade is risky for a business, leases often include break options allowing early termination at defined points, usually with notice and a payment.
Assignment and subletting provisions provide another route, letting a tenant transfer the space to another occupier subject to the landlord's consent.
What those provisions actually permit varies enormously between agreements, and terms are jurisdiction-specific, so a specific lease requires professional review.