The decision to rent a commercial property requires considerable research. Many people focus heavily on the location and the layout of the space, but there’s something else that’s just as important to think about – the terms of the lease.
Commercial leases are much different than residential leases. Most commercial leases are known as “net leases” because the tenant is sometimes responsible for other expenses besides just the lease payment.
3 types of net leases
There are three types of net leases. They’re defined by how many extra expenses the tenant has to pay. The three areas that they may be expected to pay include insurance, taxes and maintenance.
A single-N lease requires the tenant to pay for one of those expenses plus the lease payment. The tenant must pay two expenses in a double-N lease, and they must pay for all three in a triple-N lease.
It’s important to read the terms of the lease because the base lease payment will usually be lower for a triple-N lease than for a single-N lease. A commercial lease that doesn’t come with any of those extra expenses will likely have a much higher base rent than any of the net leases.
Anyone who wants to rent a commercial space must ensure they understand all the terms and conditions of the lease. This can prevent misunderstandings in the future. It may be beneficial to have someone familiar with commercial leases to review the document prior to signing it.
