Looking for an office space for lease or rent can leave you baffled by some of the terminologies. Even folks who have years of experience dealing with office space for rent can be caught off guard by the concepts. What is the difference between a net and a gross? Why are there single, double, and triple nets? At the end of the equation, you just want to know what you're actually going to pay, so here's what you should learn.
The Gross Lease
A gross lease can be thought of as the all-inclusive option. The landlord presents you with a single bill, and it is intended to cover literally everything. This means the utilities are paid when you pay the rent, and other things, like janitorial services, are also included.
A few exceptions exist. For example, the tenant will be responsible for paying for insurance. Likewise, some kinds of commercial taxes will be the tenant's problem.
The major advantage of this approach is the landlord has to deal with everything. If the electrical system has a short, that's their job. On the downside, you're pretty much at the mercy of the landlord.
A Net Lease
Nets in rental terms mean things the tenant covers. This is a common arrangement when landlords have concerns about the utility consumption habits of a tenant. Some tenants who need to significantly modify their spaces may also choose a net in order to have the ability to fully customize a location.
There are common three nets, respectively referred to as single, double, and triple nets. These nets are prorated taxes on the building, property insurance and building maintenance. If you're only paying one, it's a single net. Two is double, and three is triple.
In a single-net arrangement, property taxes are usually what is paid. Within a double-net setup, the tenant pays those taxes and property insurance. For a triple net agreement, the tenant pays all three.
Which Approach Is Best?
Within the commercial real estate industry, gross lease agreements are widely seen as advantageous for tenants. Conversely, net lease arrangements are considered landlord-friendly.
There are modified versions of these deals. For example, a gross lease can be set up to include a lump sum payment of any or all of the three nets. This allows a greater degree of cost control for the tenant, and the landlord remains responsible for enacting the services the tenant has paid for.
For more information, reach out to a realtor about office space for rent.