According to the 2010 reports published by the Wall Street Journal, the commercial real estate sector in the US includes office buildings, stores, ren...
According to the 2010 reports published by the Wall Street Journal, the commercial real estate sector in the US includes office buildings, stores, rental apartments, hotels and other properties worth nearly $6 trillion. Moreover, the reports suggest that office rents, which had been falling during the economic downturn, have started to stabilize. In case you are planning to rent New York City commercial real estate, it is preferable to understand the different types of commercial leases.
New York City Commercial Real Estate: 3 Types of Commercial Leases
Commercial real estate leases are quite different from and more complicated than residential leases. However, learning about the different types of commercial leases before renting New York City commercial real estate will enable you choose the right type of lease. Moreover, it will help you negotiate the lease terms and secure the best possible deal. The three types of commercial real estate leases are:
Gross Lease: The gross lease is commonly executed in multi and single tenant office buildings, retail and industrial spaces. The landlord collects a fixed amount of rent and pays for certain expenses, such as property taxes, maintenance costs, insurance premium, utilities and janitorial services. Many gross leases include escalation clauses, which allow the landlord to increase the rent over time to off-set increased taxes and maintenance costs. Understanding the escalation clauses before renting New York City commercial real estate will help you predict future rent expenses.
Triple Net Lease: This type of an arrangement is commonly used in freestanding facilities. In a triple net lease plan, the tenant pays a fixed rent and a significant share of the operating expenses, taxes and insurance associated with the New York City commercial real estate unit. Tenants usually avoid triple net lease arrangements, especially those who rent older properties. This is because the maintenance and repair costs of older properties can lead to unexpected expenditures. However, a triple net lease can be beneficial for those who rent a newer property because the fixed rent is comparatively lower.
Percentage Lease: Percentage leases are usually executed in retail mall outlets. This type of a lease scheme requires the renter to pay a “Base Rent” plus a percentage of the monthly sales volumes. However, the percentage is paid to the landlord only when the tenant has made a certain amount of sales in a given month.
Stonehenge is a leading New York City commercial real estate company that can help you find a commercial property of your choice. Supported by a team of 55 professionals, who specialize in acquiring, financing, leasing and managing commercial properties, www.stonehengenyc.com offers a wide variety of real estate options.
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