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Types of commercial real estate leases

On Behalf of | Sep 20, 2016 | Commercial Real Estate

When looking for a location, a business owner in Texas may see a variety of commercial real estate leases for different properties. The differences between these have the potential to cause extreme financial hardship or to benefit the company in the long-term. Choosing the type that will best suit the business is typically not a decision that should be made before reviewing the properties available.

According to TheBalance.com, a retail business may be offered a commercial real estate lease known as a percentage lease, which includes an additional payment that is figured using the company’s sales for the month, as well as the set monthly rent payment. This has the potential to raise the amount paid significantly, depending on the type of business.

On the other hand, the amount of rent may be higher if a landlord offers a gross commercial lease because the property expenses are included, but the monthly payment is set in the lease. So, the tenant pays more each month but is off the hook for maintenance and repair issues, as well as taxes and other financial responsibilities.

Triple net leases are also common for retail locations, although they are also often a landlord’s choice when renting to a business that may have high monthly expenses, such as industrial companies. TheBalance.com notes that a tenant who signs a triple net lease typically enjoys a much lower monthly rent, but may more than make up for it in maintenance and repairs if the building requires significant attention. However, a company that is able to keep most monthly costs low may be able to take advantage of the low rent and save by choosing that location.


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