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3 Types Of Commercial Real Estate Leases

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Baltimore is known for a wide array of commercial real estate opportunities.

Commercial real estate leases can sometimes feel incredibly daunting. In fact, since they are often long-term commitments, fear is a natural feeling to have. However, the reality is that most commercial real estate leases are not scary. When it comes to commercial real estate leases, there are three different types. Here is a straightforward breakdown of the various types of commercial real estate leases available and which one is best for you.

Gross Lease Or Full-Service Lease

A gross lease is sometimes also called a full-service contract. Either way, you call it, the contract itself remains the same. In a gross lease, the tenant’s rent typically covers all of the property operating expenses. In fact, these costs can include but are not limited to, property taxes, utilities, and maintenance. As a result, the landlord pays these expenses using the tenant’s rent thereby offsetting the costs. In the end, the base rent is typically quite high but is the only cost that the tenant has. Tenants will often prefer this type of lease because they avoid having to get involved in the day-to-day operations of the building since the rent is fixed.

Net Lease

The net lease is highly adjustable. In fact, there are variations within the net lease. Typically, the base rent in a net lease is lower than a gross lease. However, the tenant also pays certain operating costs.

  • Single Net Lease: Within a typical single net lease, tenants pay a single base rent that is set and a portion of the property tax. In turn, the landlord then pays the building expenses, while the tenant pays the utilities and other services directly.
  • Double Net Lease: Similar to a single net lease, a double net lease has the tenant also paying for the property insurance along with the property tax. In turn, the landlord takes over paying for any maintenance of the common area, but the tenant is still solely responsible for their own utilities and garbage services.
  • Triple Net Lease: The triple net lease encompasses property taxes, insurance, and common area maintenance, with the tenant paying for some or all the costs of the total costs. The contract structure is most definitely favorable to the landlord as opposed to a tenant.
  • Absolute Triple Net Lease: Here, the tenant takes on all the costs enabling them to have the sole responsibility of the building. However, it may behoove a tenant to purchase a building outright instead of leasing it only. Seeking advice from a commercial real estate professional is highly encouraged.

Modified Gross Lease Or Modified Net Lease

The last major type of commercial real estate lease available is the modified gross or modified net lease. A happy middle ground, this kind of lease offers a much broader range of negotiations between landlord and tenant.

Trust the Professionals At Clagett Enterprises For Your Commercial Real Estate Needs

If you’re looking for the perfect realtor for your property or to assist during your purchase of any home, you can rely on Clagett Enterprises. Clagett Enterprises is a full-service real estate company with almost 30 years of experience in the Frederick and Western Maryland area. For assistant selling your home and getting the best possible price, contact us online or give us a call at 301-665-6009. To meet our team and see some of our beautiful homes, follow us on Facebook, Twitter, Pinterest, and Google+.

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