Example Budget Breakdown:
For a lease starting in 2024, you might have:
- Base rent: $100,000
- Operating costs: $100,000
- Taxes: $100,000
- Pro-rata share (5%)
Understanding which costs you will be responsible for helps you budget and avoid surprises, ensuring the long-term financial success of your business.
Budgeting for your Commercial Lease
Different lease types can affect how you budget for rent and other expenses. Here are common commercial lease types:
- NNN (Triple Net) Lease: You pay base rent, plus additional property costs like real estate taxes, common area maintenance, insurance, and utilities. This Lease type is common for retail, industrial, lab and warehouse spaces.
- Modified Gross Lease: You pay a base rent plus utilities and increases in operating expenses and real estate taxes, but they are typically predictable. This is common for office spaces.
- Gross Lease: A simple flat rate that includes rent and utilities, often used for smaller spaces or subleases. Typically there are no additional costs associated with the Lease.
Comprehending these Lease terms will help you stay on budget and avoid financial surprises.