The Basics of Long-Term Commercial Leases

Whether you’re a business owner looking for space to run your company or an investor seeking out a commercial real estate investment, understanding the variances on commercial long-term leases is essential.

Single Net Lease – You will be responsible for the basic monthly lease payment plus other limited obligations spelled out in the lease.

Double Net Lease – You will have a monthly lease obligation that is slightly smaller, but also be responsible for all property expenses less exterior maintenance.

Triple Net Lease – Similar to a double net lease, but also you will pay all operating expenses including maintenance. Since you bear all expense responsibility, your monthly lease obligation will be the lowest of the three lease types.

If you’re considering multiple properties, how can you be sure you’re comparing apples to apples? Although the various spaces will differ in square footage, price, terms and other key factors, it is easier to do a side by side comparison if you convert all the requisite lease expenses into an annual square-foot rate.

To do this, just add up all the annual obligations plus the amount of scheduled increases over the life of the lease, then divide by the number of years for the lease. Then divide that number by the interior square footage of the space. This will give you the annual square-foot rate that you can use to compare properties.

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