Maclennan Investment Group, Inc.

925.385.8798

  • Home
  • Services
    • Commercial Property Management
    • Commercial and Industrial Leasing and Sales
      • Commercial & Industrial Properties for Sale
      • Office, Retail, & Industrial Properties for Lease
    • Individual Investors
    • Note Purchases
  • About
    • Peter Maclennan
    • Book Peter
  • Blog
  • Investments
    • Contra Costa County Duplexes, Triplexes, and Fourplexes
    • Commercial & Industrial Properties for Sale
    • Investment Properties in Central Contra Costa
    • Alameda County Duplex, Triplex, and Fourplex Invesment Properties
    • Office, Retail, & Industrial Properties for Lease
  • Articles
    • Interest Rates and Investment Property Values
    • 5 Mistakes Instant Millionaires Make
  • Contact
    • eNewsletter
  • Note Purchases
  • Commercial Loans
You are here: Home / Commercial Leasing / Commercial Lease Types

January 30, 2012 by Peter Maclennan Leave a Comment

Commercial Lease Types

Most business owners and entrepreneurs want to find the best location for their business. This could be an office, a warehouse, or a storefront depending on the type of business. The language and terminology related to real estate leases can be confusing and overwhelming. Below is a list of the various commercial lease types and what they mean to both the landlord and tenant.

Triple Net Lease or NNN Lease

A triple net lease can also be referenced as a net, net, net (NNN) lease. This lease type is often found in leases for large office buildings, large industrial buildings, and in retail or storefront buildings.

In this lease structure the tenant pays a base rental rate. The base rent will be clearly delineated over the life of the lease. Often times the base rent will escalate at an agreed upon percentage rate or based upon inflation and linked to the Consumer Price Index (CPI).

As well as the base rental rate the tenant will pay the net expenses. The net expenses are taxes, insurance, and maintenance costs. These fees can be included in common area maintenance fees or CAM charges. These expenses are in addition to the base rental rate.

Landlord

A landlord generally likes this lease structure because it places some of the future price risk on the tenant. Taxes, insurance, and utility costs are, generally, going to increase over time. The expenses that could potentially damage a landlord’s income, are passed on to the tenant and help the landlord to plan future income.

Tenant

The tenant is taking on the additional risk of taxes, insurance, and maintenance with a triple net lease. In exchange for this risk, they will often be given a lower base rental rate. A commercial tenant may not be able to avoid this type of commercial lease. When comparing a triple net lease to a gross lease all triple net expenses need to be included.

Gross Lease

When all of the expenses associated with a property are included in the base rental rate of a commercial lease, you most likely have a Full Service Gross Lease. These expenses include real estate property taxes, property insurance, utilities, maintenance, and janitorial. Some office leases, retail leases and industrial leases are gross leases.

Landlord

A commercial lease structured in this manner places the risk of expense growth upon the landlord. The landlord is responsible for any increase in the price of insurance, property taxes, or utilities. A landlord may choose this lease because the rental market demands it, the tenant leases the entire building, or the property only has one utility meter and the landlord cannot accurately divide utility costs.

Tenant

A commercial gross lease relieves the tenant of the risk of price inflation. As well, it simplifies the lease rate as the tenant will only be quoted a base rental rate that includes all expenses for the property.

Combination Leases

Most commercial leases are a combination of a net lease and a gross lease. In other words, the tenant pays some of the expenses and the landlord pays some of the expenses.

Industrial Gross Lease

In an industrial gross lease the tenant pays a base rental rate and their share of the common area expenses. The landlord will pay the property taxes and insurance costs in the first year or base year. In subsequent years, any property taxes or insurance costs above the base year amount are the responsibility of the tenant.

Modified Gross Lease

A modified gross lease is similar to a full service gross lease except that one or more item may be the responsibility of the tenant. In a modified gross lease a tenant may be responsible for their own utilities, janitorial, or maintenance costs depending on the scenario.

Procuring a commercial lease for your business can be challenging. If you would like assistance with this process, please call today at (925) 385-8798 to see if we can assist you.

Share the love:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to email a link to a friend (Opens in new window)
  • More
  • Click to share on Pinterest (Opens in new window)
  • Click to print (Opens in new window)

Related

Filed Under: Commercial Leasing Tagged With: Commercial Leases, Commercial Real Estate Investing, Terminology

About Peter Maclennan

Peter Maclennan is a Real Estate Broker at Maclennan Investment Group, Inc. a real estate brokerage and advisory firm. From novice investors to institutional property owners Peter provides tailored service to his client's needs. Call him today to discuss your real estate need at (925) 385-8798 or visit him on the web at https://www.maclennaninvestments.com. CA DRE License#01801793

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Commercial Real Estate Search

Commercial Real Estate

Top Posts & Pages

  • Financing a Fourplex in California
  • Interest Rates and Investment Property Values
  • Contra Costa County Duplexes, Triplexes, and Fourplexes

Listings

Warehouse for LeaseFor Lease! Light Industrial Warehouse 511 Wilbur Ave, A7 Antioch, CA 94509View Listing
Large Industrial Buiilding for LeaseFor Lease! Antioch Industrial Building 725 Fulton Shipyard Antioch, CA 94509View Listing

Commercial Real Estate Financing

Commercial Real Estate Financing

Peter Maclennan

Real Estate Broker
CA DRE #01801793
Twitter: @MaclennanInvest
Facebook: Maclennan Investment Group
[More …]

Topics

  • Bay Area Real Estate News
  • Benefits of Real Estate Investing
  • CA Real Estate
  • Commercial Leasing
  • Concord Real Estate
  • Contra Costa Real Estate
  • Industrial Real Estate
  • Investment Property
  • Listing
  • Martinez Real Estate
  • Mrs.' Questions
  • Real Estate Investing
  • Retirement Freedom
  • Seasons Greetings
  • Tenant Representation
  • Walnut Creek

Stay Informed!

Get notified of new listings, emerging trends, and more commercial real estate news.
* = required field

Recent Posts

  • Wishing You a Blessed Christmas & 2023!
  • For Lease! Antioch Industrial Building
  • Six Reasons Commercial Tenant’s Need an Agent…
  • Happy Independence Day!
  • Video Walk-Through of Martinez, CA Office for Lease

Company Profile

Welcome to Maclennan Investment Group, Inc., your East Bay Area real estate investment advisors. Maclennan Investment Group assists buyers and sellers of real estate maximize the investment potential of their real estate assets.

Learn More about us.
Offering real estate services in the communities of: Walnut Creek, Concord, Pleasant Hill, Martinez, Alamo, Lafayette, and surrounding cities.

Commercial Financing

Commercial Financing
Disclaimer: Information deemed reliable but not guaranteed. This site is not meant to offer legal or tax advice.

Equal Housing Opportunity

Contact Us:

  • Facebook
  • LinkedIn
  • Twitter
  • YouTube

925.385.8798

Maclennan Investment Group, Inc.
3380 Vincent Rd, Ste HUB
Pleasant Hill, CA 94523
p. (925) 385-8798
Licensed Broker in the State of California, DRE#01871809
Equal Housing Opportunity
Find us on Yelp!
Check out Maclennan Investment Group, Inc. on Yelp

Copyright © 2023 · Maclennan Investment Group, Inc.