Thinking about leasing your commercial property? While leasing your commercial property can be profitable, it is important to understand the different types of commercial leases and which ones benefit you and your business.
Here are the five most common commercial property leases.
Full Service (Gross) Lease
This lease is often used for offices and some industrial and retail businesses. The rent is all-inclusive in a full service lease. The landlord covers all of the building expenses. This includes maintenance fees, insurance, and real estate taxes. The tenant is only responsible for base rent. Keep in mind that the landlord may recoup his costs through a “load factor”.
A “load factor” refers to the method of calculating the total monthly rent costs to a commercial tenant. It combines usable square feet with a percentage of the square feet of common areas (restrooms, lobby, etc.) used by all tenants.
This lease typically benefits the tenant more than the landlord.
Net Lease
A net lease usually requires that the tenant pay a portion of the building’s operating expenses: property taxes, building insurance, and maintenance fees. The percentage can often be negotiated.
Double Net Lease
A double lease favors the landlord’s interests. “Double” means two additional costs above your base rent: property taxes and building insurance. The tenant is also responsible for their own janitorial and utility expenses.
Triple Net Lease
A triple net lease tends to be more landlord-friendly. “Triple” means three additional costs above your base rent: property taxes, building insurance, and maintenance fees. The tenant agrees to pay for all of the buildings expenses. This lease is basically the opposite of a full service lease.
Percentage Lease
A percentage lease requires a tenant to pay base rent and then a percentage on top of that based on monthly sales. This type of lease is most common for retail businesses.
Need more help figuring out which lease best suits your business? The lawyers at Stanko, Senter & Mitchell will be pleased to assist you today!
