Whether you’re a business owner looking to rent space or a new commercial property owner, you should be familiar with your commercial leasing options. If you’re in the Rochester, NY, area, the rental property management professionals at Galvin Realty Group can help you evaluate your choices. The will explain common types of commercial real estate leases and how they differ.

4 Kinds of Commercial Leasing Agreements

1. Percentage Lease

Commonly used for retail and mall spaces, this option involves a base rent payment and a percentage of the tenant’s gross revenue. For property owners with space in a desirable location, this commercial leasing option can be advantageous. Business owners who have signed a percentage lease should acquaint themselves with deductions that can be taken from their gross sales when the percentage is calculated, such as merchandise returns, sales tax, and catalog or online sales.

2. Net Lease

This is the most common type of lease. The tenant pays a base rent amount plus a percentage of the property taxes determined by how much building space they occupy. If the property taxes increase, so will the tenant’s rent payment. Other types of net leases include double-net, which combines insurance costs with property taxes, and triple-net, which includes the aforementioned items plus the cost of building repairs or maintenance. 

3. Gross Lease

For this kind of lease, the tenant pays a gross amount of rent and the owner covers property taxes, insurance, and maintenance costs. Types of gross agreements include a flat lease, for which the tenant pays a set amount in rent for a specified time, and a step lease, for which the lease payments increase over time.

4. Full-Service Lease

This lease is most often used for buildings with more than one tenant and allows them to pay a flat rental fee. In exchange, the property owner provides services like maintenance, utilities, and janitorial service.

Choosing a space for your business or creating commercial leasing contracts for your tenants doesn’t have to be complicated or confusing. A commercial Realtor is trained to help you investigate all options and choose the one that is most advantageous for you. Call Galvin Realty Group at (585) 546-1290 or contact them online to discuss working with Rochester’s leading commercial real estate company.