As a lessee of a commercial property, you become its renter, not its owner. It’s common for small businesses without the financial resources to rent first.
If your company has grown and it makes better financial sensibility to lease rather than buy, then leasing may be an affordable and beneficial alternative.
Where ever you live, it is best to do research on your market. For example, if you want to rent a property in Dallas, get familiarized with its commercial buildings so you can decide which one would suit your needs best.
Renting commercial property vs. Renting Residential
There are some similarities between buying and selling real estate and purchasing commercial property versus renting residential property. However, there are some critical distinctions between the two.
- Residential real estate is mainly made up of single-family houses and small apartments or duplexes.
- Most commercial property owners rent their buildings out to businesses.
- Large multifamily apartment complexes are commercial properties.
A commercial building for lease is usually rented out for a specific use that generates revenue.
Why Lease Commercial Property?
For commercial property owners, commercial building for rent provides opportunities to generate long-term monthly income from tenants who rent the space.
The money from commercial buildings for rent can also help cover the cost of purchasing and maintaining the structure since having tenants can keep properties in better condition.
For businesses that want to lease a commercial building for rent, it is more cost-effective to lease space over buying it.
A commercial building for rent allows new and established businesses to get their business off the ground at a reduced cost or to expand without having to buy more space and pay additional fees.
The Different Leases Used to Rent Commercial Property
Commercial realtors often use different leases to lease commercial property for rental. They include the following:
Full Service vs. Gross lease
A full-service or gross lease for a commercial building for rent includes:
- Tenant pays base rent;
- The landlord pays for property management, insurance, and tax payments;
- There’s a higher cost
Full-serviced gross leases may contain clauses limiting how much the landlord pays out.
Therefore, both parties need to read the lease carefully to avoid misunderstandings.
Net Lease Expense Share: Tenant pays a percentage of the property’s operating costs. Each type of net leasing has its expense share for the tenant.
The three most common are:
- Triple Net Leases: Triple net lease buildings have tenants who pay for the operating costs of the building, including repairs, taxes, and insurance.
- Double Net Lease: NN net leases make the renter pay for the total rent, all utilities, property taxes, and insurance, while the building owner takes care of the regular maintenance.
- Single Net Lease: N net leases offer tenants to pay for property taxes but not property taxes nor insurance.
Commercial real estate net lease deals are much cheaper than gross lease deals for commercial buildings for rent.
Net leases shift some or all the costs of operating and maintaining a property to tenants in exchange for a lower monthly rent.
So, how do you lease commercial property?
It’d be wise to research before renting out a commercial space for rent. You’ll want to know everything there is to know about your business, including its business license and financial documents.
After doing that, it’ll be time to look for the perfect commercial space for rent.
Define your needs
It would help if you first determined what your company needs from renting a commercial space.
Consider what you’ll put into the space and how many employees will work there.
After you’ve answered the question, you’ll be better prepared to begin looking for a commercial property for rent.