When it comes to commercial property, there are different lease structures available, all of which have different outcomes for the landlord and tenant. Two of the most common scenarios are illustrated above: a gross lease agreement, and a triple net fully recovering agreement.
In a gross lease scenario, the landlord takes over most of the management and responsibility for collections, and may well charge a premium for the service and convenience.
With a triple net lease agreement, the onus is on the tenant to manage the maintenance, rates and consumption costs associated with the premises or lettable area. This kind of lease may mean rental savings for the commercial tenant, but the downside is that these tasks take up significant time – and so the tenant may be distracted from their core competencies.
If you’re a potential commercial tenant, we’d advise you to be aware of the pitfalls, challenges and opportunities inherent to each type of lease agreement.
Retaining the services of a commercial property professional is a good way to ensure that the potential property has been appropriately assessed from a suitability perspective and that you have the right type of lease agreement for your situation. Overall, you should take into account that with the high costs associated with moving premises, businesses are increasingly electing to renew leases in existing facilities.
If you’re looking to renew your commercial lease, we can help with the renewal process in order to secure market-related pricing and fair lease terms.
For any queries contact Simon (083) 261 2861.