What type of commercial lease are you looking for?

On Behalf of | Nov 1, 2018 | Firm News |

Real estate agents will tell you that location is the most important factor you need to consider when looking for a space from which to operate your business. While that is important, it cannot be the only deciding factor. As you begin your hunt for space to rent here in Scottsdale, you need to consider the type of lease you could end up with as well.

Renting commercial space has some crucial differences from renting a place to live. The most important difference is the different types of leases used by property owners. During your search, you may want to inquire about what type of lease a particular property owner favors, because it could affect whether you can afford the property.

Commercial leases come in all shapes and sizes

The price per square foot that a real estate agent, property manager or property owner quotes you for a commercial space is only the beginning of what you will pay each month. The other charges you will pay depend on the type of lease. Below are some of the types of leases you could come across:

  • A net lease usually favors the property owner. This type of lease requires you to pay the base rent, plus some or all of the insurance and taxes owed on the property.
  • A double net lease also favors the property owner. It includes the base rent, insurance and taxes.
  • A triple net lease favors the property owner and is one of the more common types of leases. It includes the base rent, insurance, taxes and maintenance.
  • A percentage lease requires you to pay the base rent plus a percentage of your monthly sales and is most often in retail. Obviously, the better your business does, the more rent you would pay.
  • A gross lease (or fully serviced lease) includes a “load factor,” which are the costs that the property owner pays directly. He or she would then pass on some or all of these costs to you in your rent.

As you can see, no matter what type of commercial lease you enter into, you will pay more than the base rent quoted to you when you inquire about the property. You will need to ask what other costs will be a part of your total rental payment in order to ascertain whether you could afford to rent the space.

Even if the costs seem high when you inquire, that does not mean you must move on to another property. You can negotiate the provisions of your lease, and if the property owner lowers the prices to fit your budget, you may still move into the location.