Are you thinking about leasing some space for your business?
Make sure to learn all the commercial lease fundamentals that you can so you make the best decision possible.
Signing a commercial lease is a big deal because it’s a large expense for the business. The location of your business is also one of the biggest success factors that you have to consider.
Knowing the commercial lease fundamentals is a great start, but you should also plan on having expert tenant representation.
Some basic commercial lease information
- Parties- Remember that either party may have a legal name and trade name, due to it being a commercial lease, and may have changed names throughout the course of the lease.
- Term- A lease begins on the effective date but the term starts on the commencement date. This means you have to also understand the effect of a delayed commencement and definition of a full calendar month.
- Premises- A commercial lease using multiple names, suite numbers, or in measurements. Therefore, you have to clearly identify the space using the terms and numbers from the leases.
- Type- Office, Retail, Industrial, Storage, Telecom, other all have
their own trends and items deserving special attention. - Base rent- Given in annual, monthly or dollar/SF amounts.
Complete tenant representation- commercial lease experts
Navigating a commercial lease can be a challenge. We are here to help our tenants gain the best terms possible in the best locations. Take a look at our complete guide on commercial leasing terms so you can better understand a commercial lease.
Please contact us with any questions.
Commercial lease-rent glossary
- Full Gross: all recoveries are
included in rent. - Gross Lease: the base amount
included in year one. - Net Lease: expenses paid
with no base amount. - Pro Rata Share: premises
SF/Bldg SF. - Recoveries: costs paid by
LL, repaid by the tenant. Also
known as additional rent. - Management Fees: the amount
charged by LL for operating
the building in addition to
actual costs. - Base Year: the amount of
additional rent during a
the calendar used as a baseline
for charging additional rent in
ensuing years. - Expense Cap: restriction on
annual increases. - Capital Expenditures:
an expense of LL that is
sometimes included and
sometimes excluded from
reimbursable operating
expenses. - Consumer Price Index:
an index which serves to
increase base or additional
rent. - Percentage Rent: tenant
pays to LL a percentage of
gross sales. - Porters Wage: an index
which serves to increase
base or additional rent. - Gross-Up: artificial increase
in the operating expenses
that vary with occupancy.
Usually 95% or 100%.
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