The most common types of commercial leases include:
- Triple Net Lease (NNN): Tenants pay rent, utilities, and all building operating expenses, including maintenance, insurance, and property taxes. This type of lease is common for commercial spaces and provides tenants with more control over their spaces while potentially lowering their rent based on usage factors like utilities. For more details, you can visit SquareFoot at https://www.squarefoot.com/blog/different-types-of-commercial-real-estate-leases/.
- Double Net Lease (NN): Tenants are responsible for rent and utilities, as well as property taxes and building insurance, while the landlord covers maintenance costs. This lease type is popular for any commercial space. Additional information is available at SquareFoot: https://www.squarefoot.com/blog/different-types-of-commercial-real-estate-leases/.
- Single Net Lease (N): This lease stipulates that tenants pay for rent and utilities, plus property taxes. The landlord handles building insurance and maintenance expenses. It is used for various commercial spaces. For further reading, visit SquareFoot: https://www.squarefoot.com/blog/different-types-of-commercial-real-estate-leases/.
- Modified Gross Lease: Tenants pay base rent plus a portion of operating costs, with specifics varying by contract. It occupies a middle ground between gross and triple net leases, being common for any commercial space. More information can be found at SquareFoot: https://www.squarefoot.com/blog/different-types-of-commercial-real-estate-leases/.
- Absolute NNN Lease: In this lease, tenants cover all building expenses, including maintenance or repairs to the building’s roof and structure, essentially owning the building without purchasing it. This lease applies mainly to tenants with national or regional footprints. For an in-depth understanding, refer to SquareFoot: https://www.squarefoot.com/blog/different-types-of-commercial-real-estate-leases/.
- Percentage Lease: Tenants pay a base rent and a percentage of gross business sales. This lease is typical for retail mall outlets and offers lower base rents since tenants agree to pay a portion of sales. You can find more details at SquareFoot: https://www.squarefoot.com/blog/different-types-of-commercial-real-estate-leases/.
Each lease type has its own set of responsibilities for both tenants and landlords, affecting costs, maintenance, and operational expenses differently. For any commercial lease you’re considering, it’s recommended to consult with a real estate attorney to review the agreement. These sources provide a comprehensive overview of common commercial lease types and their typical usage.