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Types of commercial leases

There are several types of leases that a Tenant might consider when looking for a rental space. The category of a lease depends on how the landlord determines the cost of rent and who pays for each of the property’s expenses.Understanding these different type of leases can help you decide on terms that work for your business. Common lease types include:

  • Single net : In a single net lease, the tenant pays for rent and property taxes.
  • Double net : In a double net lease, the tenant pays for rent, insurance and property taxes, besides the insurance that the tenants business pays for.
  • Triple net : In a triple net lease, the tenant pays for rent, insurance, property taxes and property maintenance costs, which should be detailed as to what those specific maintenance cost include and exclude.
  • Full-service : Also known as a gross lease, a full-service lease occurs when the tenant is only responsible for rent and the landlord covers all other costs associated with the space. This is the most common type of commercial lease and the one that provides the most protections to tenants.
  • Percentage : In a percentage lease, the tenant pays a predetermined amount of base rent each month and a percentage of their monthly sales from that property. Percentage leases are most commonly used in retail spaces and any tenant that produces high sales volumes.
  • Usable vs Rentable : Then there is the difference between usable square feet and rentable square feet.

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