3 Types North Carolina Commercial Real Estate Leases: Comparing Pros and Cons – Online Free Press release news distribution
If you are a North Carolina entrepreneur looking to lease commercial real estate, there are numerous factors to consider as you do your homework in order to find the right solution. As usual, when you address your business needs, cost will be one of the first issues. In general, the more income you make, the more rent you can afford. A helpful assessment that small business consultants often suggest is comparing your rent to current and expected earnings. While the details will vary based on your industry, location, and other business goals, you may be aiming for a rent to revenue ratio of around 2 to 20 percent.
However, when you are thinking about rental costs, another important factor is the type of commercial real estate leasing that makes the most sense for your business. Whether this is your first time leasing or needing a refresher course, it is helpful to weigh the pros and cons of different types of leases. You can count on a North Carolina commercial real estate attorney to give you the details. However, comparing the basics can be helpful.
- Net real estate leasing: With this agreement, your company pays the rent separately from the costs. You are responsible for paying for utilities, insurance, property taxes and maintenance in your own space. You will also be responsible for expenses related to the management of any common area, including a parking lot or garage, shed, and related facilities on the property. Commercial real estate experts report that this type of lease, often referred to as a “triple net” lease, is most common for a stand-alone building with a single tenant under a long-term contract.
- Benefits: You can better control costs through responsible use of utilities. Plus, you’ll pay the actual cost of property taxes and maintenance instead of a landlord’s forecast.
- Disadvantage: If major repairs are required, e.g. If, for example, you need to replace a stove, air conditioning or a roof, your company must have the reserves to cover the costs.
- Full Service Commercial Real Estate Lease: This type of rental agreement covers almost all costs associated with occupying the room. Your rental amount includes property taxes, maintenance, insurance fees, and some utilities, although your company is generally responsible for electricity. The full-service commercial lease is most common in large buildings with numerous tenants.
- Benefits: Your costs are predictable as you won’t be affected by a property tax hike or high repair bill.
- Disadvantage: The full service lease is usually the most expensive. The landlord determines the rental amount based on a variety of contingent liabilities and allows some buffer so that your rent is higher.
- Gross lease: The gross lease falls somewhere between the net and full service versions, so you pay set fees as part of your rental amount. You are likely responsible for property taxes, upkeep of the common area, and your own utilities. According to regional economists, the average gross rent in urban areas is $ 33 per square foot and slightly lower in outskirts like Gastonia, NC.
- Benefits: You can predict costs better compared to a net rental agreement, and the rental agreement depends on what triggers a rent increase.
- Disadvantage: You have less control over costs. The landlord has decision-making authority and you pay for these decisions.
Our North Carolina commercial real estate attorneys can advise you on your options
While this comparison of the pros and cons of different commercial real estate leases can be useful, our team at Mullen Holland & Cooper PA can advise you on the details that pertain to your particular circumstances. To schedule a consultation at our Gastonia, NC office please call 704.864.6751 or visit us online.
Source: Precision Legal Marketing
Release ID: 15813
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