All You Need To Know About Commercial Property Leasing & Rental Explained

Commercial leasing can seem complicated to the uninitiated. However, with a basic understanding of how it works, you can confidently navigate through the process and make the best decision for your business.

In this post, we'll explain everything you need to know about commercial property leasing and rental. From what goes into a lease agreement to common terms used in the industry, we've got you covered.

So, whether you're just starting out or are simply curious about commercial leasing, read on for enlightenment!

What Goes Into A Lease Agreement?

When leasing commercial property, there are a few things you can expect to find in the lease agreement. The first is the term of the lease, which is typically either three or five years.

The rent amount and when it's due will also be outlined in the agreement, as well as any special provisions or restrictions on use. In addition, the agreement will state who is responsible for repairs and maintenance costs, and it may include an exit clause detailing the conditions that must be met in order for either party to terminate the lease.

Common Terms Used In Commercial Leasing

Below are some of the most common terms you'll encounter in commercial leasing agreements:

Triple Net (NNN) Lease: A triple net lease is one in which the tenant is responsible for all property-related costs, including taxes, insurance, and maintenance.

Pass-Through Charges: These are expenses incurred by the landlord that are passed on to the tenant, such as property taxes and insurance.

Base Rent: This is the amount of rent due each month, irrespective of any pass-through charges.

Tenant Improvements (TI): These are upgrades or modifications made to the property by the tenant at their own expense. They're typically negotiated as part of the lease agreement and can be a major factor in deciding whether or not to sign a lease.

Leasehold Improvements (LHI): Similar to TI's, these are improvements made to the property by the tenant, but they're paid for by the landlord.

Lease Commencement Date: This is the date on which the lease officially begins.

Lease Expiration Date: The lease expiration date is the last day of the lease term.

End of Term Clauses: These are specific conditions that must be met in order for either party to terminate the lease agreement before it expires.

As you can see, there's a lot to consider when leasing commercial property. By understanding the basics, however, you can feel confident in negotiating a lease agreement that's right for your business.