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What are the different types of commercial leases?

On Behalf of | Oct 23, 2022 | Real Estate Law |

When you’re ready to change locations or expand your business, you may need to obtain a new commercial lease. You probably know a little about commercial leases if you’re already doing business, but did you know there are several lease options to consider?

The right type of lease can enhance business stability while ensuring your rent costs remain at predictable and manageable levels. The sections below contain insight into several of the lease options available in New Jersey.

Net leases

These leases are common and come in three forms (net, double net and triple net). The tenants share typical net lease costs such as real estate tax, operator expenditures and insurance premiums. The portion of expenses you pay will depend on which form of net lease you choose. You can expect your rent to increase in conjunction with a rise in landlord expenses.

Gross leases

This type is easily the simplest of commercial leases. Tenants pay a flat monthly rent while the landlord covers all operating expenses. Sometimes the tenants must pay utility costs like electricity, air conditioning and heat. They typically contain an escalation clause enabling the landlord to increase the rent when their own expenses rise.

Percentage leases

In a typical percentage lease, the tenant pays the landlord a base rent amount plus a percentage of their gross income. Percentage-based leases are common in commercial property that houses retail establishments, but can work for other types of businesses.

The lease terms you agree to can make a big difference in your New Jersey company’s bottom line. Before you sign your next rental agreement, take some time to learn more about commercial real estate and your lease options.