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3 most common types of commercial leases

On Behalf of | Mar 19, 2019 | Commercial Real Estate, Landlord And Tenant Law |

When you look to set up shop in South Florida, you have to understand not only how the market works but also what your lease options look like. You may have a strict budget and need to really clamp down on expenses to keep your doors open.

Finding a commercial lease that suits your individual needs is easier when you know what to look for. Three different types of leases exist to help both landlord and tenant get the terms required to keep both parties happy and profitable.

1. Full-service lease

A full-service lease, or gross lease as it is sometimes known, is all-inclusive. In this type of lease, the landlord bundles all additional fees you may have such as insurance, property tax, utilities and cleaning fees. While this bundle of services makes budgeting easier, you do want to make sure you know what you get. For instance, ask for the frequency of cleaning services, and negotiate the amount of those services in accordance with your needs. Also, ensure you pay only your relevant portion of the taxes and utilities.

2. Modified gross lease

In a modified gross lease, only some of the services included in the full-service lease remain. Tenants typically pay for utilities and cleaning services, but property taxes and insurance remain rolled into the terms.

3. Net lease

A net lease affords the tenant a lower base lease every month. However, the landlord builds in the other fees the tenant is responsible for. You may need to pay property taxes to the landlord, but get your own insurance and utilities. There is typically a maintenance fee rolled in that covers your proportionate share of the common areas in and around the building. It does not, however, cover maintenance to your particular space.

In a hopping real estate market like South Florida, landlords often get to draw up the type of lease agreement that works best for them. Take a look at the terms, and only sign on the dotted line if everything lines up to your needs.