Various Commercial Real Estate services Explained

Are you looking into expanding your business to a larger office or upgrade to a different location? This means you will require commercial real estate service and it is something worth pondering over. Your concerns will come from things like budgetary and logistics issues and smooth transition that will guarantee continuity of your business in the new location.

Given the expanding market and thriving economy, every business irrespective of the size can find itself on the path of expansion or relocation. Before you move, what are the commercial real estate services available that you can choose and which best suit you needs?  There are a number of services to choose from, ranging gross leases that provide predictability and convenience to potentially other more affordable options found in the different net leases or something in between.

The common types of commercial real estate lease agreements are often calculated as either net or gross. Negotiating the best possible commercial lease agreement for your business and budget is among the most crucial elements in the process. With an understanding of what the services entail, you and your broker can now begin your search for the perfect office space to help you grow and expand your business into the future. Carry out a proper investigation into the options to ensure your business or organization enters into the right lease.

In the net method lease agreements, tenants are responsible for more utilities and upkeep costs but enjoy a smaller base rent. Gross leases mean higher rent. However expenses like, building upkeep, property taxes and utilities in the hands of the landlord.

Full Service Lease/ Gross lease

In this full service lease, the rent is usually high. This is because the rent covers every single operating cost including utilities, common area maintenance, janitorial and property taxes. Common area fees covers elevators, lobbies, hallways, parking and lots. Even though the rent is high, it is relatively consistent and reliable enabling tenants to plan their monthly budget.

Because of the aspect of consistency, gross leases are very convenient for tenants who can now make predictable monthly expenses. Neither do they have to worry over impromptu expenses nor unplanned costs since the landlords take responsibility allowing tenants to concentrate on their business.

Net Leases

Net leases are a common type of commercial real estate service because rent is often lower compared to that of gross lease agreements. Despite the low rents, tenants still have to pay for costs like insurance, utilities, and property taxes. However, they are highly varied and adjustable.

Single Net Lease

This lease allows tenants to pay rent and property taxes. The landlord them covers the building expense and insurance cover fees. The rent is calculated based on utilities and portion of the building leased

Double Net Lease 

Bears resemblance to single net lease; however, tenants pay rent, utility costs and a portion of both the property insurance and the building’s property taxes. Landlords cover the maintenance of the common areas.

Triple Net Lease 

Triple net leases are very popular for retail and industrial properties. Landlords in this lease estimate expenses based on tenants pro-rata, share. The tenants pay part of the costs of the common area maintenance, property insurance and property taxes. The triple net leases also more landlord-friendly.

Percentage Lease

In this agreement, tenants pay a base rent and an additional percentage per month which depends on the tenant’s sale. This type of lease is common with shopping centers with high traffic and spaces like malls.

Absolute Triple Net Lease 

It’s a very uncommon and equally unpopular CRE lease agreement. This is because in this agreement, tenant takes full responsibility for costs of rent, property taxes and insurance and building maintenance. In fact, one would argue that buying a buying a property would be a better option.

Modified Net Lease                                                                       

A Modified net lease also known as modified gross lease is most probably the only net lease that allows some sort of middle ground for the two parties- landlords and tenants. These types of leases are highly adjustable, additional costs are negotiated between landlords and tenants. The tenants pay for the utilities while rent can be collected in a single payment including any or all of the net expenses.