The national vacancy rate for commercial real estate is at a five-year low point, indicating strong demand. Owning commercial property is one of the best ways to grow your investment in the housing market.
But you need to understand how commercial lease agreements work to find effective ways to protect your investment. Read on as we demystify lease agreements and explore key essentials.
Types of Commercial Lease Agreements
Each state has regulations governing what contracts property owners and renters can enter. The main types of commercial lease agreements available in Savannah, GA are:
- Gross lease agreements
- Net Lease
- Modified gross lease
Gross Lease Agreements
These agreements are common and involve the tenant paying a fixed rent and the landlord covering all expenses. This arrangement is ideal because it involves simple commercial lease terms that are easy to carry out and execute for both the landlord and the tenant.
Net Lease
The rent under a net lease agreement is much lower because tenants incur the cost of maintenance and repairs. The expenses the tenant pays will vary based on the terms of the contract.
Modified Gross Lease Agreements
This agreement provides a compromise where tenants and landlords split the cost of operating expenses. Both parties set the base rent, and the lease rate will stay constant regardless of changes in cost.
Key Terms in Commercial Lease Agreements
Business lease contracts contain various legal terms that you ought to understand as a property owner. You must study the terms of the lease agreements while keeping in mind the property laws in Savannah, such as the property tax policy.
Some of these terms include:
- Lease term, which is the period where the agreement is binding
- Rent or amount payable by tenants
- Amount of security deposit and when the landlord can withhold it
A reputable property management company can break down complex terms in commercial lease agreements. We can help you understand whether to go with an exclusive-use or permitted-use contract based on which option works best for your investment.
Lease Negotiation Tips
Understanding commercial lease agreements is very useful when negotiating with prospective tenants. Before the negotiation process, make sure to do the following:
- Understand the local property market
- Learn the legalities to avoid imposing unfair restrictions
- Consult local property professionals
It's important to factor in flexibility to ensure tenants feel cared for. However, effective commercial property leasing also requires that you enforce the terms of the agreement if breaches occur.
Lease Renewal
Commercial lease agreements have a finite lifetime, and that's where renewal comes in. Have a property manager look over your lease to understand if keeping it the same is in your best interest.
A property management company can streamline the lease renewal process based on the landlord-tenant relationship. We can also help you with lease enforcement, ensuring only tenants who abide by your rules stay in the property.
Get Help With Commercial Lease Agreements in Savannah, GA
Commercial lease agreements are your first line of defense if any legal risk arises. An excellent lease agreement can help you attract and maintain the right tenants, enhancing the profitability of your property.
At PMI Property Management, we know it can be tough to navigate the legal side of managing your property. Contact us today and let us help you protect your investment.
