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What to Look for in a Commercial Lease

Posted by Martinez Team Commercial on June 22, 2023

What You Should Look For in a Commercial Real Estate Lease

Whether you are a new business looking for your first space, or an established business looking to change locations, you have probably weighed your options between buying and renting. If you have determined that renting is a better fit for your budget and your business needs, then you are on the hunt for a commercial property to lease. As with any other type of contract, there are some very important variables to consider when renting a commercial space.

We are the Martinez Team and today’s article will explore what to look for in a commercial lease.

What are the Types of Commercial Leases?

Commercial leases are more complex than residential leases. While residential leases are typically under one year lease, commercial leases deviate more. They typically begin with a three year term and can be as long as twenty years, and they can vary in terms of who pays for what. Let’s break down some of the standard leases for commercial properties.

  • Full Service – These leases indicate that the landlord is responsible for all expenses related to the property, and the tenant is only responsible for their rent. These are also called gross leases an
  • Modified Gross – These leases are charged as a gross rate except if there is an increase the following year in real estate taxes, insurance, or CAM. They are the most common type of commercial lease.
  • Percentage – These leases indicate that the tenant pays both a percentage of their monthly sales and their rent. These are common amongst retail businesses.
  • Single Net – These leases indicate that the tenant pays both property taxes and their rent.
  • Double Net – These leases indicate that the tenant pays the property insurance, property taxes, and their rent.
  • Triple Net – These leases indicate that the tenant pays property maintenance expenses, property insurance, property taxes, and their rent.

*Florida is the only state that charges sales tax on commercial leases.

What the Lease Should Include

A commercial lease agreement should include all of the main components related to the property. This can include:

  • Duration of lease
  • Rent amount
  • Security deposit
  • Insurance
  • Subleasing 
  • Property maintenance
  • Exclusive use
  • Permitted use
  • And other terms

Make sure that any commercial real estate lease that you are looking at includes all of these components, as well as anything else that you want to be considered.

How to Negotiate a Commercial Lease

Never sign any type of contract without reading it, and never settle for the first commercial lease that you find in your hands. You need to make sure that the agreement works for both parties, the landlord and the tenant, and you can request to make changes to the contract. Here are a few tips for this process:

  • Working with a commercial brokerage or lawyer will do you a world of wonders. Contracts are long and oftentimes confusing, so having professionals on your side can help you catch things you may have otherwise overlooked.
  • When hiring a good commercial brokerage they will begin the lease negotiations with a lease proposal that covers all the business terms of the lease. This document is non-binding for both parties. This saves time and money for any tenant so when they hire their attorney to negotiate the rights of the lease, all the business terms have already been agreed upon.
  • Make sure you are fully aware of all financial expectations from you. The last thing you want to do is sign an agreement and realize later on that you have been missing payments or that there is an upcoming and unexpected financial obligation.
  • Think critically when making your decision. Try to envision the long-term of your business, and make sure that the duration, location, expenses, and other factors of the lease work for your long-term goals.

Check Out Our Commercial Real Estate Listings

If you are looking to rent a commercial property, now you know what to look for in your lease. As a commercial brokerage, the Martinez Team works with landlords, sellers, tenants, and buyers alike. Let’s work together to find the perfect commercial real estate listing that will suit the needs of you and your business in South Florida. Contact the Martinez Team or call our team at (954) 394-7078. We are commercial real estate agents with the experience and expertise to help you.

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