Here are a few more questions to ask yourself as you pursue a commercial lease:
3. Is your lease a gross lease or a net lease? Your commercial lease should say what is included in the rent that you pay your landlord. Typically leases are triple net leases, gross leases, or somewhere in between. Sometimes leases do not clearly state which category they fall into, so go over your lease carefully to determine this information. Gross leases are usually all-inclusive, which means that the tenant just pays the landlord one sum and the landlord then takes care of insurance, maintenance, and real estate taxes, although tenant utilities may or may not be included in this lease. In triple net leases, tenants pay a share of the insurance, maintenance, building utilities, and real estate taxes on top of set rental costs. Recognizing the difference between these leases is important when looking at multiple spaces so that you can compare the actual bottom line prices.
4. How is my rate determined? Your lease should clearly state what the rental rate will be for the duration of your lease. Typically, this information is presented in a rental chart depicting the annual rent rate and the corresponding monthly payments you will make. Usually the annual rental rate increase will be based on an exterior formula (i.e. in proportion to the rise in the costs of living allowance) or be a flat amount (i.e. 2.5%). In the case of a percentage rent, which is sometimes used for retail leases, a tenant pays the annual rental costs plus a percentage of their sales for the year.