[VIDEO] 3 Types of Commercial Real Estate Leases

Commercial real estate leases are a popular option for many business owners, especially those just starting out.

The flexibility that comes with signing a short-term commercial real estate lease with an option to leave without paying additional penalties means business owners can “try before they buy” (similar to renting an apartment vs buying a house) without a significant cash outlay to get into the property.

Why Lease Commercial Property?

And while leasing commercial space may in some cases not require as much capital or assessment efforts as purchasing or building a brand new facility, there are still a number of important things to consider when leasing commercial real estate for a business.

commercial real estate leases
Click to view commercial properties for sale and lease in the Capital Region of New York.

What Does a Commercial Real Estate Sales Agent Do When Helping a Business Owner Lease Property?

As a commercial real estate sales agent helping owners looking to lease commercial space (also referred to as a “tenant representative”), it is my responsibility to provide all the information an owner must know in order to make the best leasing decision for their business and employees.

This includes a number of important duties, such as:

  • Evaluating the owner’s needs for additional space
  • Searching available commercial properties
  • Arranging and attending property tours
  • Analyzing all relevant property data (e.g. square footage, utilities, zoning rights, etc.), ensuring alignment with the owner’s wants and needs
  • Negotiating the lease to help their client get the most fair value for their commercial real estate investment

The three main types of commercial real estate leases are percentage, gross, and net:

Percentage Lease

The tenant pays a monthly rental rate as well as a certain agreed-upon percentage of monthly sales in the business. This type of lease may be found in retail properties like strip malls.

Gross Lease

The tenant is only responsible for paying their monthly rent. monthly rent includes everything, with the the landlord paying the property taxes, Common Area Maintenance (CAM) fees, utilities, and other expenses. In a gross lease,

Net Lease

The tenant is responsible for paying the rent as well as some or all of other building costs such as CAM, property taxes, utilities, etc. There are varying levels of net leases, including the Triple Net (NNN) lease, where the tenant pays rent and all additional costs.

 

For more information about the different types of commercial real estate leases, watch the 9-minute video below:

James K. Kim About James K. Kim
James "Jim" Kim is a commercial real estate agent with Cushman & Wakefield / Pyramid Brokerage Company in the Capital Region of New York, specializing in retail, office, and industrial tenant and landlord representation.

Thoughts?