Are you a business owner looking for new office or retail space? Finding the right commercial lease can be overwhelming. You need to understand the different types of commercial leases, which are very different from a residential lease. In this blog post, we’ll outline three common lease types and explain the pros and cons of each.
The most common type of lease is an NNN – also called a Triple Net lease. This contract requires the tenant to pay base rent and the three “nets:”
- Property Taxes
- Building Insurance
- Common Area Maintenance (CAM)
In a Triple Net lease, the landlord is responsible for maintaining the structure of the building, while the tenant incurs all other expenses related to the property. This lease type will have a lower per square foot base rent, but you’ll need to accurately understand the other three expenses to estimate the total monthly cost.
The second type is a Full-Service Gross (FSG) lease. In this arrangement, the tenant pays the base rent, and the landlord incurs all expenses related to the property. The advantage to an FSG is that the tenant will know exactly what the monthly cost will be, but the cost per square foot will be higher than an NNN lease.
A Modified Gross (MG) lease lands in the middle of an NNN and FSG. In an MG lease, the tenant pays the base rent along with some of the operating expenses. This type of lease is common for a tenant that might utilize higher than normal expenses in a certain area – such as the electric bill for a lighting store, for example.
If you are in the market for commercial property, it is important to understand the different types of leases available. Each lease has its own benefits and drawbacks, so it is important to consult with a professional before making a decision. Bluewater Properties can help you navigate the complex world of commercial real estate and find the perfect property for your business. Give us a call today to learn more!