Commercial Leasing can be complex and difficult to explain without going into great detail. A commercial lease is a binding contract between a tenant and a landlord. The terms negotiated today will bind both parties for the entire lease term – be it one year or ten years. Commercial leases are not standard. A lease can differ quite dramatically from one property owner to the next. More sophisticated landlords, like mall owners for example, utilize longer and more complicated leases. Owners of smaller buildings are often the opposite, preferring to keep the paperwork simple. There are different leases for different types of business uses. For example, retail leases will incorporate different language than industrial leases and an office lease will utilize specific clauses that would not pertain to a retail user. Most commercial leasing is divided into two components – net rent and additional rent (or T.M.I.). Net rent is the basic price per square foot that is paid to the landlord for the premises. Additional rent is paid to cover the landlords operating costs for the premises and can include realty taxes, building insurance, maintenance of the property, common area utilities, a lease administration fee, etc. Unlike residential leases, commercial leases are mainly carefree to the landlord. In other words, commercial tenants pay for virtually all costs the landlord incurs in the operating and maintain the property and these expenses are apportioned to each tenant on a per square foot basis.
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