The Quick Facts On Common Commercial Lease Types

Written by Economic Development Jobs on March 28, 2018. Posted in Investing in triple net properties, Net lease, Nnn deals

Nnn leasing

If you are a commercial real estate investor or commercial real estate owner then you know that the market is doing fairly well. In 2015 commercial real estate investment increased by nearly 90 percent, and during 2016 there were over $74 billion dollars worth of commercial buildings that went up on in the United States alone. Investing in commercial property is also not a field that seems as off limits or restricted as it once did, and studies show that nearly 60 percent of millennials are thinking of throwing their hat in the ring. If you happen to be looking to get into the industry yourself, then there are a few things you should be aware of up front. One of those items is the different commercial lease types.

If you want to start investing in commercial property then you will need to understand the various types of commercial lease types that you will eventually offer to your tenants. The four most common commercial lease types are: percentage lease, net lease, double net lease, and triple net lease. Each of these commercial lease types differ by what the rent is based on.

For example, in a percentage lease the tenant will pay you, the investor, a calculated base rent plus a percentage of their monthly sales. As you can probably imagine, this type of lease is popular for owners of retail shops. On the other hand, triple net leasing requires the tenant to pay their rent plus the A triple net lease is a lease agreement on a property where the lessee agrees to pay the “three nets” which are real estate taxes, building insurance, and maintenance on the property. You can probably see how some lease types like the triple net lease does benefit the landlord quite a bit.

Another type of commercial lease that is sometimes used in office, industrial and retail leases is the fully serviced lease that involves the landlord paying nearly all of the costs listed above and passing them on to the tenant in a later transaction. Commercial real estate is lucrative, but you must ensure that you are securing the best type of commercial lease type for yourself. If you are unsure about which lease type would work best, it may be best to check with someone else in the industry before conferring with your future tenant. You should understand the type of lease you want to secure before ever negotiating with tenants. It is your property after all.

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