By Anthony Migliore, Senior Advisor
Commercial leases are an essential aspect of any business owner's life. Whether you're a landlord or tenant, you need to be familiar with the different types of commercial leases available. In this article, we will discuss the various types of commercial leases and their benefits and drawbacks.
Gross Lease
A gross lease is also known as a full-service lease. Under this type of lease, the tenant pays a fixed amount, which includes rent and all other costs such as utilities, insurance, and maintenance. This type of lease offers the tenant predictable expenses and makes budgeting easier. The landlord is responsible for the property's expenses, and the tenant does not need to worry about them.
Net Lease
A net lease is a lease where the tenant pays rent and a portion of the property's operating expenses, such as property taxes, insurance, and maintenance costs. There are three types of net leases - single, double, and triple. In a single net lease, the tenant pays rent and property taxes. In a double net lease, the tenant pays rent, property taxes, and insurance. In a triple net lease, the tenant pays rent, property taxes, insurance, and maintenance costs.
Percentage Lease
A percentage lease is a lease where the tenant pays a base rent and a percentage of their gross sales. This type of lease is common in retail spaces such as malls or shopping centers. The landlord benefits from the tenant's success, and the tenant pays more when they are earning more.
Modified Gross Lease
A modified gross lease is a hybrid of the gross and net leases. In this type of lease, the tenant pays a base rent amount and some of the operating expenses. However, the landlord and tenant can negotiate which operating expenses the tenant will cover.
Each type of lease has its benefits and drawbacks. The best lease for your business depends on your unique circumstances. We can help you navigate the different types of leases and find the right one for your business.