Which Type of Commercial Lease Is Right For My Business?

 Posted on December 00, 0000 in Commercial Real Estate

Whether you are the owner of a commercial real estate property, or you are looking to rent a space for your business, reaching an agreement on a commercial lease is a crucial part of your operation. There are a variety of lease structures available depending on the property's use and the preferences of both the landlord and tenant. The complexities of these different kinds of commercial leases can be challenging to interpret, but an experienced real estate attorney can help you determine the best options and negotiate a lease that addresses your needs.

Types of Commercial Leases in Illinois

Commercial leases vary based on the rights, responsibilities, and obligations of both the landlord and the tenant. Some of the most common types of commercial leases include:

• Gross lease: In a gross or full service lease, the tenant pays rent while the landlord handles all expenses related to the property, including property taxes, insurance, and maintenance. Rents are typically higher with a gross lease, but the tenant benefits from the convenience of the services the landlord provides.
• Triple net lease: In a triple net lease, the tenant pays rent and also takes responsibility for the three net costs associated with a commercial property, which are insurance, property taxes, and common area maintenance. This arrangement removes work and some expenses from the property owner, but it usually also means that rent is lower.
• Master lease: A master lease allows the tenant to sublease the property and collect income from rent. As a tenant, you might attempt to negotiate for a master lease if you are considering purchasing the property outright in the future.
• Ground lease: A ground lease allows the tenant to rent and develop a plot of land, and it is commonly used for franchise businesses. Tenants are able to save money up-front because they do not have to purchase the property, and landlords are able to receive rental income throughout the term of the lease.
• Sale-leaseback: A commercial property owner may arrange to sell the property and then lease it from the buyer. This can be a good option for owners who need an immediate source of income but wish to continue using a property for business purposes.

Contact a DuPage County Commercial Lease Attorney

At Lindell & Tessitore, P.C., we have worked with owners and tenants on all manner of commercial leases throughout our years of real estate law experience. We can help you understand the various lease options and make sure they are executed properly in your lease agreement. Contact a Naperville commercial real estate lawyer today at 630-778-3818.

Sources:

https://www.investopedia.com/terms/l/leaseback.asp

https://www.investopedia.com/terms/g/ground-lease.asp

https://www.squarefoot.com/leasopedia/different-types-of-commercial-leases/