Are you having a headache after reading your office rental statements? Are they beyond your comprehension? Fear not my friend! This article will save your day! After reading this post, you will surely understand how your lease rate was computed.
Always remember that the quotation of lease rates varies from one commercial real estate advisor to another. Several factors are being considered in the computation such as the type of property, its current market value and the conditions set by the lessor. Before signing a lease contract, make sure that the responsibilities of the landlord and the tenant are well-defined.
When a lease is classified as Full Service Gross, the tenant and the property owners share the expenses. The tenant pays a monthly bill to the landlord who will be accountable for the payment of property taxes, insurance, maintenance, utilities and other operational-related expenses. Other additional expenses will be shouldered by the tenant, including the percentage share of an increase in the “Base Year” for operating expenses.
On the other hand, a Triple Net Lease (NNN) requires the tenant to pay the property taxes, insurance and maintenance in addition to his or her monthly rental. Janitorial and utility expenses are usually paid by the tenants as well. This type of lease is common for R&D/Flex buildings.
In the Austin area, retail properties usually offer Triple Net Lease (NNN). The quoted rates were usually computed as yearly or monthly. The monthly or yearly rental will be computed per square foot. For example: the rental for a 5,000-square-foot retail space costs $1.25 per square foot so the rental fee will be $6,250 per month.
The janitorial expenses depend on the type and size of the office as well as the frequency of the janitor’s cleaning schedule. Meanwhile, electric bills are based on the consumption.
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