So you’ve found the perfect office space for your business. While locating the ideal space is important, understanding and negotiating the terms of your lease may ultimately have a larger impact on the profitability of your business.
The two primary types of commercial real estate leases are triple net (NNN) and full-service (sometimes referred to as gross).
With a triple net lease, lessee is responsible for the three primary net expenses: real estate taxes, building insurance, and maintenance. While base rental rates for a triple net lease are typically low, there can be risks associated with the unpredictable costs of these net expenses. For example, if your building is in need of roof repair, snow removal services, or other types of maintenance, the cost would be divided proportionately among all tenants. Such expenses can vary widely from year to year, are nearly impossible to predict accurately, and often result in litigation.
With a full-service or gross lease, the three primary net expenses are incorporated into the base rental rate. The lessee will know exactly how much rent will be owed each month, and will not need to worry about these unexpected additional fees. As shown in the sample comparison below, when all costs are factored into a rate, a full-service lease may be much less expensive than a triple net lease, even when the base rental rate is higher.
Cummings Properties offers full-service leases, which include base real estate taxes, structural and building-standard mechanical maintenance, building insurance, snow plowing, common area cleaning and maintenance, landscaping, property management services, and ample, free daytime parking. Where covered garage parking is available, it never comes with any additional cost for client firms or their employees. This arrangement allows our clients to focus on their businesses without having to worry about real estate-related matters.