Types Of Office Leases

The two most common types of leases in accounting are operating and financing capital leases.

Types of office leases. When evaluating options for office space lease it is important to compare the different lease options with an eye toward all expenses and not just the base rental rates. Though some sources break out the full service lease type from the gross lease in commercial real estate they are usually the same. The base rent for a net lease is lower than a gross lease but the tenant also pays fixed operating expenses such as property taxes insurance and common area maintenance cam items. In fact there are many examples of landlords quoting mg or nnn rent for multi tenant office buildings which further highlights the need for proper due diligence during lease negotiation.

Leases are contracts in which the property asset owner allows another party to use the property asset in exchange for money or other assets. Nnn base rental rates tend to be much lower with additional expenses added for the real monthly rate. In conveyance type lease the lease will be for a long period with a clear intention of conveying the ownership of title on the lessee. This type of lease helps the landlord by fixing costs but tenants aren t fond of it especially with older properties.

The net lease is a highly adjustable commercial real estate lease. The triple net lease adds a third cost. Fsg leases are used almost exclusively for multi tenant office leases. Gross or full service lease.

In a gross or full service lease the landlord pays for. A modified gross lease occupies the middle ground between a gross lease and a triple net lease. In a sale and leaseback a company owning the asset sells it to the lessor. A triple net lease is the most common kind of net lease regarding retail warehouse space and freestanding commercial buildings.

The gross commercial lease is used most often in office buildings industrial and some retail. It s also becoming more common for landlords to use this type when leasing office space. There are two main categories of lease types when leasing office space gross and net leases which can further be broken down into a variety of subtypes that assign different degrees of financial responsibility to both tenant and landlord. There are four types of net leases.

In general a modified gross lease means that the tenant pays base rent utilities and a portion of operating costs. Notwithstanding these conventions there is nothing that requires a landlord to use one lease type or another. Summary of nnn lease modified gross or full service commercial leases. A net lease refers to a category of leases including single double and triple.