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An industrial real estate lease is a rental agreement between a commercial space owner (landlord) and a business (tenant). They also often include costs in addition to the base rent, such as common area maintenance (CAM) fees, utilities, maintenance and repair costs, and more.
The tenant also has no automatic right to renew the lease. If a lease is contracted out, once the end of the term is reached you can choose to renew the rental agreement based on renegotiated terms, such as a rental increase. It is then up to the tenant if they accept these terms and sign a new leads.
How do commercial leases work? … There are multiple options for commercial lease agreements. In a full-service lease, or gross lease, the tenant pays the base rent, and the landlord pays for the utilities, insurance, taxes and other costs of operating the building.
The most obvious thing to look for in a commercial lease is the cost and the frequency of payment.
Keeping in mind that you should seek professional advice before you commit to a lease, here are a few of the major components to look for:
To start, it is helpful to understand the terminology and the options. There are multiple options for commercial lease agreements. In a full-service lease, or gross lease, the tenant pays the base rent, and the landlord pays for the utilities, insurance, taxes and other costs of operating the building. This is where the “loss factor” of rentable versus usable space comes into play, because the tenant will be paying for a portion of the common areas as well.