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A modified gross lease is the most common type of real estate rental agreement. The tenant pays base rent at the lease's inception, usually lower on a PSF basis than a FS lease, but it takes on a proportional share of the other costs associated with the property as well, such as property taxes, utilities, insurance, and maintenance. Although there are many variations, usually the tenant will also pay utilities for its suite directly to the providers of utility services and provide its own janitorial.
The triple net lease is the least costly lease rate on a PSF basis that you'll encounter when searching for commercial real estate. However, this type of lease requires the tenant of a property to pay for all costs associated with the maintenance of the property, as well as all real estate taxes and insurance.
A full-service lease is typically defined as a lease that has one, all-inclusive rental rate which includes both the base lease rate and the operating expenses (property taxes, insurance and common area maintenance) combined into one figure. The rental rate will be higher than other lease types, but often that is the only payment made by the tenant; however, in many cases, there will be some CAM charges.
Commercial leases are typically three to five years; however, many NNN single tenant ground leases are 15-20 years in length. However, a fun fact is the Guinness factory in Dublin is 300 years into a 9,000 year lease! The longer terms guarantee enough rental income for the landlords to recoup their investment. Leases are often negotiable, but for a commercial lease, landlords frequently allow customization of the space for the sake of the renting business, called Tenant Improvements, or TI’s.
Common Area Maintenance (CAM) expenses are fees paid by tenants to landlords to help cover costs associated with overhead and operating expenses for common areas. They are things such as property taxes, insurance, management fees, roof replacement/repair, parking lot re-coating, landscape, HVAC, plumbing, electrical, painting of the building and a myriad of other maintenance costs. Typically a tenant will establish a base year (the year the lease is effectuated) and will pay their percentage of the building they occupy of the cost of the current CAMs less the cost of CAMs in their base year.
When seeking NNN properties for a commercial lease, it is vital to understand how CAM differs from NNN. CAM is an acronym for Common Area Maintenance, while NNN features three nets, including CAM, property tax, and insurance.
As the owners, lessors, and maintenance & management team, we take pride in every property and truly care about our tenants. Our success is based on your success and our philosophy is simple - treat others as we'd want to be treated. For us, that means a personal touch, a professional approach, and a true partnership that is focused on your long-term success. We're there with you every step of the way. Looking for the ideal commercial property with a trusted, local partner that cares about you? Look no further. Hazen Enterprises has got your back.