Know Before You Go: Understanding Commercial Lease Pricing Models
The world of commercial leases is much less cut-and-dry than that of the usually non-negotiable residential leases. The best first step to take when looking into renting your commercial space is to be aware of the different kinds of commercial lease pricing models and understand which kind is best suited for your needs.
There are three primary kinds of commercial lease agreements – Triple Net (NNN), Mod-Gross, and Gross/Full Service. Each lease type has its own set of pros and cons, and understanding what you’re getting into before you’re signing your rental contract will absolutely benefit you during your property search. The more you know, the more likely you’ll make sound decision and be able to move forward with your property lease free of stress or worry.
We want you to have all the information you need to make the best decision for you and your business, which is why we’ve put together the following overview of the three primary lease types you might run into when renting a commercial space:
Triple Net (NNN)
In a Triple Net (NNN) lease, the tenant pays both the base amount for rent along with the net amounts for the three typical costs of the lease – property taxes, building insurance, and maintenance. They also are responsible for utilities and any additional building costs defined by your rental contract.
While this lease can be good for those who are interested in understanding the nitty gritty of the different kinds of extra costs that come along with your base rent, it can also be more expensive than other options, more complicated, and more time consuming in order to keep track of all the additional expenses you have to pay regularly.
A Modified-Gross lease represents a middle-ground between paying all the individual net costs of a property along with a base rent and having a full service or gross lease, in which you only pay a flat rental rate that’s all-inclusive.
Although this lease can be beneficial if you’re looking to have control over some of the individual net costs of your property, it can also be complicated and difficult to negotiate the nuances of who-pays-what.
Gross or Full Service
A Gross or Full Service lease provides a seamless experience for the tenant. With a fixed amount month-to-month rental rate that’s all-inclusive, a gross or full service lease makes it easy for a business owner to forecast expenditures and budget accordingly without worrying about property tax or building maintenance price fluctuations.
For busy business owners, a Gross or Full Service lease agreement is the best option for your commercial property rental, which is why that’s what the Josey Offices uses for all of our lease agreements. We know your time is valuable, which is why we roll your rent and all additional expenses into a flat, reasonable rate that keeps your budgeting process as streamlined as possible.
We believe in simple lease agreements with flexible terms that benefit our tenants. A Full Service lease allows us to provide simple contracts with no hidden fees or surprise expenses, so you can stop worrying about the ins and outs of your lease and more about getting moved in and settled in your new office space.