Hi, there are many types of leases but some common lease types include gross lease, net lease, and updated gross lease. To understand what is the best lease type for commercial property, you need to know the pros and cons of each one of them. As a property owner, I have a bit of knowledge about such things, so you can rely on me as I share some facts about the lease types below.
Types of Commercial Leases in Real Estate
There are actually multiple lease types, and the best one would depend on the priorities and needs of both the landlord and the tenant. I have shared below some common types along with their pros and cons, so it will help you determine the perfect one for you.
Gross Lease
As a tenant, signing a gross lease means you’re responsible for paying the base rent. And, the landlord will handle the additional expenses like maintenance fees, insurance, and real-estate taxes. But, in some cases, the tenant has to incur some expenses after the first year of occupancy. The problem may lie with the landlord here, who has to cover most of the expenses but they can charge a higher rent.
Net Lease
A tenant will pay the rent and other expenses of the building, like common area maintenance, property taxes, and insurance. The landlord will incur the rest of the expenses, if applicable. There are different net leases like triple, double, and single, and each type has a distinct set of financial obligations that landlords usually give to the tenants.
Modified Gross Lease
This type of lease varies from contract to contract, but in most cases, the tenants have to pay the rent, utilities, and a portion of operating expenses. In some updated leases, tenants pay only the rent and the utilities for the first year, but in each extra year, they have to pay a pro rata share of the building expenses.
That’s the three major types of leases in commercial real estate. The landlord and tenant must speak and discuss these among themselves, and decide which one will work best.
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What is the Best Lease Type for Commercial Property?
JaspreetK
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8 months
2025-03-21T10:27:00+00:00 2025-03-21T10:27:00+00:00Comment
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