1. What is Commercial Leasing?
Commercial leasing is when a business rents property from a landlord for the purpose of conducting their business. There are many reasons why businesses choose to lease commercial space instead of owning the property outright. For one, it can be more cost-effective since you will not have to worry about maintenance or repairs.
Additionally, it can be easier to find a suitable location if you are open to leasing instead of buying. And finally, leasing gives you the flexibility to move if your business needs to change.
2. Types of Commercial Leases
There are three main types of commercial leases: gross, net, and triple net.
• Gross lease: With a gross lease, the landlord pays for property taxes, insurance, and common area maintenance, and the tenant pays a single monthly rent amount. This is the simplest type of commercial lease and is often used for office or retail space.
• Net lease: A net lease is when the tenant presides over the payment of a portion of the property taxes, insurance, and/or common area maintenance in addition to their monthly rent. There are three types of net leases: single net, double net, and triple net.
• Triple net lease: A triple net lease alludes to the situation in which the tenant pays all of the property taxes, insurance, and common area maintenance in addition to their monthly rent. This is the most common type of commercial lease for industrial properties.
3. The Process Involved
The process of leasing commercial space can be divided into three main steps: finding a property, negotiating the lease, and signing the lease.
• Finding a property: The first step is to identify your business’s needs and then search for properties that meet those needs. You can use online listings, commercial real estate brokers, or networking events to find potential properties.
• Negotiating the lease: Once you’ve found a few potential properties, it’s time to start negotiating the terms of the lease with the landlord. This includes things like the length of the lease, the monthly rent amount, and who will be responsible for paying for property taxes, insurance, and common area maintenance.
• Signing the lease: Once you’ve reached an agreement with the landlord, it’s time to sign the commercial lease. This is a legally binding document so be sure to read it carefully before signing.
There are quite a few more steps to fully engaging the commercial lease, but hopefully, these suffice as an introduction to the technical process. For more, the 18 Sierra Financial website and blog are at your disposal; contact us for comments or services.