Part 1: Contracts will vary by your level of control over the property you’re leasing and how long you can stay.
There are many variations of the commercial real estate lease. They vary largely by the level of control over the use of the property assumed by the tenant or retained by the property owner.
Full-service gross lease, the most common lease in multi-tenant office buildings, is used when the property owner provides a full range of building services to tenants, including
- janitorial services
- systems maintenance or replacement
- common area and exterior services and upgrades
The underlying concept is to allow the owner or manager a high degree of control over the operation of the property.
Absolute net lease requires you to pay rent and property expenses as additional rent. As the tenant, you pay, on behalf of the owner, all property expenses for
When the term for this lease is exceptionally long, you may be required to upgrade the property to conform to newly implemented governmental regulations, including seismic strengthening or asbestos abatement.
There are many advantages to negotiating a long-term lease instead of a short-term arrangement.
A long-term lease
- provides perks in a soft market, where an owner may offer free rent periods and tenant improvements as an inducement to lease long-term
- protects you from sky-rocketing rents until the lease expires.
As a short-term tenant, you can face
- a rent raise with merely a 30-day notice
- the lost of valuable signing concessions if you end up staying for years
- an owner’s ultimatum after you’ve moved in: sign a long-term agreement favorable to the owner or vacate
- a request to move out with only a 30-day notice unless a longer notice period is negotiated up front.
Leases for more than one year must be in writing to be valid in most states.
Commercial property leases are a diverse set of instruments designed to meet the needs of office, industrial/warehouse and retail property owners and tenants.
All leases define the business terms, which are the smallest portion of a lease. The rest of the lease seeks to contemplate and prepare for possible future events.
As a practical matter, make all your leases in writing regardless of how short the term. Remember that the person you are dealing with today may be gone tomorrow.
Because there are almost as many lease contracts as there are buildings to lease, you should have qualified legal counsel review yours before you sign it.
Custom leases, especially for high-rise office buildings, large retail or industrial sites, can easily run 50-80 pages.
Commercial Real Estate Group of Tucson can help you structure a lease contract that addresses your important issues. Contact the tenant representation company to learn more.