Understanding Commercial Lease Terminology

By February 27, 2024 Our Company, Uncategorized

Entering a commercial lease is a major step for any business, akin to setting the foundation for future success. At Bluewater Properties, we believe in empowering our clients with the knowledge to navigate these waters confidently. Let’s step through the essential terms of a commercial lease, ensuring you’re equipped to make informed decisions.

The three main types of commercial leases are NNN (Triple Net), FSG (Full-Service Gross), and MG (Modified Gross). Learn more about these three main types, and prepare yourself with the right questions to ask when negotiating your commercial lease. 

Key Terms to Know

  • Additional Rent: This term covers costs beyond the base rent, like property taxes and maintenance fees. Knowing this helps tenants budget beyond just the monthly rent.
  • Agent: Agents, whether real estate brokers or leasing agents, are the navigators of the leasing process, assisting in finding the perfect space and negotiating terms.
  • Build-Out: Customizing your space is often necessary. This term refers to interior modifications to tailor the space to your business’s needs.
  • Building Class: Understanding whether a building is Class A, B, or C can significantly impact your decision, affecting everything from rent to client perception. Class is determined based on numerous factors, including building age, location and ease of access, rental rates, market perception, building finishes and amenities, and HVAC system quality. 
  • Non-Competition Clause: Such clauses prevent tenants from facing direct competition within the same property, ensuring your business maintains its unique market position.
  • Assignment and Subletting: These terms define your rights to transfer the lease or sublease space to others, offering flexibility in unforeseen circumstances.
  • Termination and Default: Knowing the conditions under which your lease can end or what happens if terms are breached is crucial for risk management.
  • Insurance Requirements: Leases will specify the insurance you must carry, protecting both tenant and landlord from various risks.
  • Dispute Resolution: Should disagreements arise, it’s important to know how they’ll be resolved, through mediation, arbitration, or court.

Why It Matters

Understanding these terms isn’t just about legal diligence; it’s about securing a lease that aligns with your business’s goals and needs. With Bluewater Properties, we will help you set the stage for your business’s future success.

Ready to find your perfect commercial space? Contact Bluewater Properties today, and let’s turn your business dreams into reality.

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