Effectively Lease Commercial Real Estate Properties Commercial Real Estate & Property for Lease in India

When leasing commercial real estate, it is important to know the different types of leases and their benefits and drawbacks. The three most common types of commercial leases are net lease, gross lease, and modified gross lease.

Net leases are the most common type of lease, followed by gross leases. Modified gross leases are becoming more popular due to the increasing popularity of triple nets (NNN) leases. Understanding these different types of leases will help you negotiate a better deal when leasing commercial real estate.

Net Lease- Under a net lease, the lessee is responsible for payment of property taxes, insurance, and maintenance costs. The term "net" refers to the fact that you are not responsible for these other expenses. You are basically leasing the space "net" of all additional costs. Additionally, the tenant must pay any fees or commissions associated with procuring this lease (such as attorney's fees).

These leases also often require tenants to pay for their own utilities. Tenants can sometimes negotiate lower base rent in exchange for assuming some of these extra responsibilities typically reserved under gross leases.

Sometimes an allowance will be made in the monthly rental rate if you can show that your business requires you to offer customer parking on-site through employee or other means. Tenants may also be required to share a percentage of their sales with the landlord as additional rent. This is often referred to as an "adder," because it's added onto the monthly rental rate.

Gross Lease- A gross lease requires that a tenant pay all expenses except property taxes and insurance premiums. Often times, tenants will assume responsibility for utilities in addition to paying the base rent under a gross lease agreement.

The advantage of a gross lease is that you are not responsible for any operating expenses, but there's no negotiation room on the price of the space unless you can convince the owner that your business requires special circumstances such as customer parking or access at unusual hours (for example late night T-shirt printing company).

Modified Gross Lease (Triple Net) - A modified gross lease, also known as a "triple net" (NNN) lease, is similar to a standard gross lease; however, the tenant is responsible for payment of property taxes and insurance premiums.

This type of commercial real estate lease agreement can be favorable to the tenant because their liability will only increase over time if there are increases in local taxes and insurance rates. Because tenants often pay for utilities under this type of lease agreement, they may pass some or all savings on to customers by way of reduced prices.

When entering into negotiations for leasing commercial real estate properties it's important that you understand your rights as well as responsibilities. The more familiar you are with common commercial real estate leases, the better prepared you will be to make an informed decision when it comes time to sign on the dotted line.

Understanding common commercial real estate leases can also help you make your business more profitable by allowing you to offer budget-conscious services and prices that reflect your actual costs.