Two words are often associated with commercial lease agreements: “net” and “gross.” Both words pertain to the rent calculation method in the agreement. A “gross lease” means that a tenant pays one lump sum for rent, and the landlord pays additional expenses, such as taxes, insurance and maintenance.
A “net lease,” on the other hand, usually has a lower base rent because the tenant is responsible for most or all other expenses associated with running the business. There is also a third type of lease, which is called a “modified gross lease.” This is a combination of the two.
In contrast, Prologis Clear Lease® consists of base rent, plus a fixed charge inclusive most operating expenses, management fees, and capital repair and replacement expenses. Because of the simplicity of Clear Lease®, negotiations move quickly and customers easily understand how the lease terms will impact business operations.
Types of Commercial Leases
Commercial lease agreements are complex and sometimes confusing for tenants. This is especially true with the net lease option because there are multiple types of commercial net leases:
Find Your Ideal Commercial Lease Agreement
When shopping for a commercial lease, it is important to compare the different lease options while considering all expenses, not just the base rent. Most importantly, read the lease carefully to ensure a complete understanding of your responsibilities before signing.
Remember that all commercial leases are negotiable to some degree. If a lease doesn’t work for your business, make a counter offer.
Learn more about leasing industrial real estate, the leasing process and the different industrial lease parameters you need to consider in this guide from Prologis.
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Learn about typical commercial lease terms and what landlords and tenants expect from them. Find out what most affects commercial lease terms.