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3 types of commercial leases

On Behalf of | Nov 28, 2023 | Real Estate

Finding a commercial space for your business often takes considerable work. You have to find a good location that has most, if not all, of the items important to your company.

Once you find the ideal location and a place to lease, you have the challenge of negotiating a commercial lease. These aren’t the same as residential leases, so you should ensure you understand exactly what you’re agreeing to before you sign the lease. 

Net lease

A net lease is one that passes on some or all the normal operating expenses to the tenant. They’re dubbed single, double or triple net leases, depending on how many expenses you’ll have to pay. Property insurance, maintenance costs and property taxes are the three areas typically covered in a net lease. These are all in addition to the base rent payment, so be sure to plan the budget accordingly if you’re entering into a net lease. Typically, a triple net lease has a lower base rent than the other options. 

Percentage lease

A percentage lease is fairly common in spaces like shopping centers. In these leases, the tenant pays a base rent plus a specific percentage of their profits. The percentage is usually determined by the square footage of the business. 

Full-service lease

A full-service lease is one that involves the tenant paying only rent. The landlord covers other expenses. Typically, the rent price is higher than other types of leases since it’s all inclusive except the utilities. 

Even if you believe that the lease is on the up-and-up, it’s best to have someone familiar with these leases review the terms to ensure you know exactly what you’re entering into.

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