a modern commercial property typically seen for rent

Don’t Sign the Lease Yet! Do You Know This Information?

Every landlord is different. They use different lease agreement forms and will often use different rental terminology when referring to the same rental type. It is important to understand exactly what the landlord means and what is expected of you before you sign a lease.

To guide you along, we have created a basic glossary for commercial property rental types:

  • Base Rent – the minimum amount specified in a lease based on square footage the tenant must pay, excluding taxes, insurance, and common area maintenance.
  • Full Service Gross – the tenant is responsible for base rent, while the landlord pays all other expenses.
  • Modified Gross – often used with multi-tenant buildings, where tenants share a single utility meter. The total sum of the building’s utility cost is divided between all tenants occupying the building, in addition to their base rent. The landlord is responsible for all other expenses.
  • Triple Net – also known as NNN, refers to the property tax on the building, insurance, and common area maintenance. This cost is found by dividing the annual operating cost of the building by its square footage, excluding roof and parking lot maintenance. This will vary from year to year, so it is included in a lease as an addition cost to the base rent. The landlord is responsible for all other expenses.
  • Absolute Net – identical to Triple Net or NNN, except the cost does include roof and parking lot maintenance, in addition to base rent.
  • Double Net – the tenant is responsible for base rent, property tax, and building insurance, but is not responsible for common area maintenance. The landlord is responsible for all other expenses.
  • Single Net – the tenant is responsible for base rent and property tax. The landlord is responsible for all other expenses.
  • Percentage Rent – the tenant is responsible for base rent and a percentage of their monthly or annual gross sales to the landlord, while the landlord is responsible for all other expenses.

a modern commercial property typically seen for rentRemember: A rental agreement is binding, so make sure you understand the rental type required and all of the specifics involved are clearly stated in the lease before you sign.

Craft Commercial offers exclusive tenant representation and has access to hundreds of off market properties that are not readily available on common consumer sites such as: Loopnet, Craigslist and Cityfeet.

If you still have questions, need more information, or further assistance negotiating the best lease agreement for you, contact us at info@craftcommercial.com.

5 thoughts on “Don’t Sign the Lease Yet! Do You Know This Information?

  1. My fiance was tasked with finding a commercial property insurance company to help him. He is new to the whole process and has been looking for a while so I thought I would help him research. I liked that you mentioned all the different types of insurance like single net when a tenant is responsible for rent and property tax.

  2. Thanks for explaining the different types of rent agreements when leasing land. Percentage rent sounds like an interesting agreement where the landlord profits if the tenants profit first. I wonder what sort of properties this deal typically applies to. It could work for something like a concert venue. For a typical office situation, I bet they would want a type of rent that is easier to budget and plan for.

    1. Thanks Kairi for your comments. Stay tuned for more posts! — Sonya

  3. My boss has just instructed me to look for a commercial property for lease. She only gave me a range of amount that is only allowable. It really helped when you said that you have listed here its types so I can determine what to find.

    1. Thanks Joy! If you are in the Raleigh area, give us a call and we’ll try to help.

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