The terms and details of a lease can mean the difference between a successful and a failed tenancy. A net lease is the most common lease in commercial real estate because the specific terms benefit both the tenant and the landlord. Since the tenant pays a base rent in addition to other expenses associated with operating, maintaining and using the space, net leases typically have a lower rental rate to compensate for the additional costs.
Accordingly, net leases relieve the landlord of much of the stress and responsibility that comes with managing and maintaining the property. Here are three reasons why people choose a net lease.
Net Leases Can Make Leasing Simpler
Because the terms of a net lease shift most, if not all, of the financial responsibility from the landlord to the tenant, tenants receive the closest experience of property-owning, while still maintaining the terms of a lease. Under these terms, tenants have more freedom over how the property and the utilities are managed and used, which gives them more control over how their money is spent. Additionally, since landlords have less financial responsibility associated with the property, landlords don’t need to spend time managing and processing the additional expenses.
Net Leases Secure a Property for Longer Periods
Net leases typically offer longer leasing periods, which benefits both the tenant and the landlord. Long-term leases give the landlord and the tenant a sense of security. If a tenant is looking for a property to rent for about ten years or more, a net lease is the best option. It establishes a secure relationship between the tenant and the landlord while giving the tenant a guaranteed space for long-term business operations and the landlord a long-term source of income.
Net Leases May Result in Less Conflict
Because net leases delegate more financial and operating responsibilities to the tenant, this type of lease eliminates the need for extensive management and communication between the landlord and the tenant. As a consequence, net leases may result in less-frequent opportunities for miscommunication and conflict. Accordingly, the relationships built between the landlord and the tenant through a net lease may be more easily maintained.
Understanding how rental expenses are charged within different leases is a crucial component of responsibly renting commercial real estate spaces. Interested in commercial real estate investment? Ground + Space is a leading commercial real estate brokerage firm that specializes in single-tenant and retail NNN investments. Contact us today to find out more about our current listings!