If you’re a business owner, leasing commercial real estate is one way to expand your operations without having to buy or build your own establishment. However, finding the right property can be challenging, especially if you lack understanding of what you’re getting into. Lease contracts are often multi-year agreements with severe penalty provisions for violations and pre-termination. To ease your mind, the real estate agents at Lawrence Realty in Red Wing, MN, answer the most common questions about commercial leasing.

4 FAQ About Commercial Leasing Answered by Local Real Estate Agents

What Is a Commercial Lease?

This is a type of lease that allows the tenant to utilize the property for business or commercial activity. Under a legally binding contract, the landlord receives money in exchange for assigning occupancy rights to the tenant for a certain period.

What Are the Usual Provisions Included?

Some of the common provisions outlined in the written agreement are property type, lease terms, rental fees, leasehold improvements, and security deposit. It may also include conditions for lease renewal, subletting, insurance provisions, and the type of business or commercial activity permitted on the premises.

What Are the Different Types of Commercial Leases?

There are three basic types of commercial lease: full service, net lease, and modified gross. A full-service lease means the rent covers all of the expenses, such as property taxes, insurance, janitorial services, repairs and maintenance, and utilities.

In a net lease, the annual rent is lower but usually includes monthly costs associated with property upkeep. There are three expenses associated with a net lease in addition to the rent and a tenant may need to cover one or all there of them: maintenance fees, property tax, and property insurance premiums.

A modified gross lease is similar to a full-service one, but the parties involved negotiate on which expenses are included in the base rent. Utilities and janitorial services are typically excluded.

How Do You Choose the Right Commercial Property?

Before signing a lease, consider a few factors about the property you’re interested in, such as location, amenities and services, and your landlord’s history. Assess if your location has sufficient foot traffic and ample parking for your clients. Check the available amenities and services and see if they are adequate for your business requirements. It’s also a good idea to do some research on your future landlord to know whether the person is good to do business with.

If you’re planning on leasing a commercial property, contacting the real estate agents at Lawrence Realty should be your first step. With almost seven decades in the business, their team of certified real estate agents will guide you through the complex process of finding your ideal space. Call (651) 388-4745 to schedule a consultation with professional, or visit their website for real estate listings.