Finding a good location for your company is a step in the right direction when you’re trying to open or grow a business. Once you find the spot that you feel is best, it’s time to work out the lease for the space. Some individuals might not realize that commercial leases aren’t the same as residential leases, so you have to read the terms carefully to ensure you’re getting the deal you think you are.
The price on the lease is one thing that you need to consider. While it’s easy to focus on the base fee, there are others that might be hidden in the lease. In order to unearth these, you need to know a few lease terms.
- Percentage lease: You pay the base rent plus a percentage of the gross income of your business. This is common for retail spaces.
- Net lease: You pay the base rent plus a specific portion of property taxes.
- Net-net lease: You pay the base rent plus a specific portion of property taxes and insurance on the leased space.
- Triple net leases: You pay the base rent, a specific portion of the taxes, all of the insurance and are responsible for all operating costs of the lease. This type of lease is usually reserved for industrial spaces.
Some commercial landlords operate only with a gross lease, which means the leasee is only responsible for the base rent. The landlord would cover insurance, taxes, and upkeep and repair costs.
Another operating cost to consider is utilities. These expenses might be factored into the lease. This is common when multiple businesses share one utility meter. If you’re responsible for your own utilities, you must determine whether your space has its own meter or not. If it doesn’t, find out how the utility amount is determined.
Your attorney can help you to review the lease so that you don’t have unexpected surprises. This is one option that you have for working to protect your company as long as you have the lease reviewed prior to signing it.