In many cases, the net rental figures quoted to you by your landlord won’t include operating expenses related to running the premises. Instead, as a tenant, you could be charged extra for utilities such as:
<ul>
 	<li>common area charges</li>
 	<li>parking</li>
 	<li>generator contributions</li>
 	<li>cleaning</li>
 	<li>security</li>
 	<li>park levies</li>
</ul>


In most cases gross rentals should include these items. The two exceptions to this are water and electricity – these will either be metered or pro-rated on a consumption basis according to the floor area occupied within a shared facility.

These additional expenses that are sometimes left out of a quoted rental figure can add up to a significant extra cost, which can mean that the total cost of renting premises becomes unaffordable. Sometimes, though not always, landlords quote ‘net rental’ numbers so that the premises look less expensive than their competitors’. They’re then able to secure a deal while at the same time having you, their tenant, carry the risk of increases in operating expenses.

In general, this won’t happen if you deal with listed funds or larger, private landlords. In these cases, lease terms are more transparent and the saleable details are usually clearly itemised on all marketing information.
In summary then, always request a ‘gross rental’ figure from your prospective landlord, as this will give you a more complete and useful measurement of the total cost for the space you are looking to occupy. Also, always pay attention to the fine print in your lease agreement, in order to prevent “unquoted” operating expenses becoming your direct responsibility without you realising it.

What is Gross versus Net Rental?

If you’re looking for a commercial facility, it’s a good idea to engage one or even two property brokers who have the expertise to meet your requirements within a focused sector, whether you’re needing office space or looking for a warehouse facility. Here are five tips to get the most out of commercial property brokers.

1. Work on fixed timelines. Give your broker a brief window (a week or so) to service your requirement. If you’re not satisfied with their performance after this period, open the enquiry up to a new broker

2. Landlords don’t like enquiries that are ‘hawked’ around the market.&nbsp;When a buyer or tenant engages multiple brokers, landlords are less open to the deal, since they’re being contacted by multiple brokers for the same enquiry. In addition, landlords are less likely to negotiate if they’re under the impression that there are multiple enquiries in the marketplace for their assets.

3. Avoid signing onerous mandates. It’s far better to work to brief, fixed, exclusive periods with brokers, as this ensures that you’ll get good service without being bound to brokers who aren’t performing.

4. Discuss broker fees up front.In most cases, commissions are paid by the landlord or seller.

5. Make sure that the rent quoted is a “gross rental” number. Gross rental includes items such as net rental, operating costs, parking, generator contributions, park levies, rates and taxes.

Negotiating a good commercial property deal means granting exclusivity to the best brokers you can find. If you stick to the points outlined above, you’ll have the best chance at securing the right property at a competitive price relative to the market.

Post category

What is Gross versus Net Rental?

Property Insights

20 Oct 2011

Five tips for dealing with commercial property brokers

Property Insights

13 Jun 2011

Bryanston

Office Space

Melrose Arch

Office Space

Rosebank

Office Space

Sandton

Office Space

Waterfall

Office Space

Gosforth Park

Industrial Space

Isando

Industrial Space

Longmeadow

Industrial Space

Midrand

Industrial Space

Plumbago

Industrial Space

Pomona

Industrial Space

Waterfall

Industrial Space

Our blog

Post category

What is Gross versus Net Rental?

Property Insights

20 Oct 2011

Five tips for dealing with commercial property brokers

Property Insights

13 Jun 2011