Reading through your entire commercial lease in Phoenix can be daunting and intimidating. Before you sign on the dotted line, familiarize yourself with these six commercial real estate terms that may be discussed at the negotiating table.
• Gross lease: A gross lease means the lessee (the person who wants to lease) pays a flat amount for rent, and the landlord agrees to pay expenses, such as property taxes, insurance, and maintenance. This type of lease is more common with apartment and home renters.
• Net lease: In this type of agreement, the tenant must pay some or all of the property expenses in addition to rent. If you are a small business owner, a net lease could add up quickly due to property taxes, building insurance, maintenance, and other expenses.
• Full-service rent: This “all-inclusive” rent might include operating costs, common area maintenance fees, real-estate taxes, and more. Before signing your commercial lease in Phoenix, make sure to find out if your total cost only accounts for the basic shell of the office or if it covers others fees as well.
• Non-compete clause: This clause prevents landlords from leasing space in the same building to direct competitors or companies operating the same type of business. If you are in an industry that expects a lot of walk-in traffic, consider having this clause added to your lease to reduce competition.
• Common area maintenance (CAM): With CAM fees, the tenant is charged additional rent to maintain the common areas used by all other tenants. This could include landscaping, snow removal, insurance, and property tax. CAM fees can be charged in fixed installments or from time-to-time as major repairs are needed. Check your lease to see if CAM fees are variable or fixed, as well as whether or not there is an annual maximum that your company can be charged.
• Tenant improvements: These are improvements made for or by a tenant to the interior of the leased space. If the office space you are researching could use some changes or upgrades, it may be worth negotiating these costs with the landlord to see if they would be willing to work with you.
Whether you rent a property from us or another real estate firm, Camroad Properties wants you to feel confident when it comes time to sign your lease. Knowing these common terms will help you better understand the leasing process and stay in control of your negotiations.
Visit www.camroadproperties.com today for additional leasing tips and our complete list of available office spaces in Phoenix, Mesa, and Tempe.
Written by: Savannah Ivanitski