3 Popular Types of Commercial Leasing Options
The demand for commercial real estate has certainly increased throughout the past few years. In fact, statistics gathered from 2012 to 2017, the commercial real estate industry experienced a annual growth of nearly 4%. Throughout 2016 alone, nearly $74 billion dollars worth of commercial real estate was put in place throughout the United States. If you’re wanting to enter into the world of commercial real estate, it makes sense to learn about your leasing options.
Learning About 3 Types of Commercial Leases
It’s understandable to feel overwhelmed concerning the wide range of commercial leasing options available. With that in mind, here is more information about three popular types of commercial leases.
- Modified Gross Lease
This type of lease will have tenants paying rent with a notable change after the first 12 months. After the first full year in this type of leasing agreement, tenants will pay a specified share of the operating costs of a building. The unknown factor of how much your share could change is something that steers tenants away from this type of agreement.
- Absolute Lease
While it’s easy to get this lease confused with a triple net lease, these two leases aren’t quite the same thing. In an absolute lease, the landlord is absolved of the responsibility of the property. That being said, this type of commercial leasing option tends to only be available to businesses with somewhat of a national presence and an excellent credit standing.
- Triple Net Lease
A triple net or NNN lease is an agreement in which the tenant agrees to pay the three major nets which include, real estate taxes, maintenance fees, and building insurance costs. While skimming this information over, it might seem like this option would be the least attractive. That being said, this type of commercial rent agreement is more beneficial than you might think.
Why Many Choose the Triple Net Lease
One reason that many tenants agree to a commercial rent agreement under NNN terms is due to the stability this leasing option provides. In triple net lease agreements, any costs tend to be fixed. This allows a tenant to better prepare for the future by having an idea of what to set aside for leasing costs.
Many triple net leases are for longer term agreements. In fact, many of these leases are for anywhere between 10 to 25 years and sometimes longer than that. This helps to provide a tenant with a sense of stability due to the longer lease agreement terms.
To summarize, there are several types of commercial rent agreements to consider. That being said, the triple net lease offers many advantages that are hard to find with other types of agreements. To begin finding retail properties of your own, it’s wise to work with a commercial real estate company. In turn, you’ll have a helping hand in finding the perfect commercial properties for you.
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