Taking The Lead

In Florida Condo And Homeowner Association, Real Estate, And Business Law

How do commercial leases work?

On Behalf of | Nov 24, 2020 | Business Law |

If you need to lease commercial property space, you should learn about the many types of commercial leases available. Each lease features a different setup so you can select the one that best fits your business needs.

In addition to basic rent, commercial property lease types account for a variety of other costs. These costs include property taxes, insurance, utilities, business space maintenance or repairs, and common area maintenance or repairs.

Net commercial leases

As explained by 42Floors.com, a net lease may offer the lowest rental price per square foot. However, a net lease also passes on the cost for other items to the lessee rather than putting the burden on the landlord.

With a net lease, a business should budget appropriately to accommodate fluctuating costs, including sometimes unexpected costs.

Gross commercial leases

On the opposite end of the spectrum, a gross lease keeps financial responsibility for all elements associated with a property with the landlord or building owner. In exchange, the landlord may charge higher rental costs. A lessee may pay more in the end with a gross lease but may benefit from the stable expenditure, allowing them to budget more easily.

Mixed format leases

Some commercial leases include features of both net and gross leases. For example, a landlord may take on responsibility for common area maintenance and property taxes while a lessee pays for insurance and utilities.

This information is not intended to provide legal advice but is instead meant to give business owners and managers in Florida information about the different types of commercial property leases and how each one works.