In addition to the terms that may vary, the actual lease type can vary as well. There are five main types of leases. The type you need depends on your business structure, budget, and space available.
A gross lease is the most common type of Commercial Real Estate agreement. The tenant submits monthly rental payments to a landlord who, in turn, takes responsibility for paying taxes, insurance, maintenance costs, and other expenses associated with owning property in California. These are often called “standard leases,” but understand that there is nothing “standard” about them. There is no regulatory authority that states any terms are set in stone.
A net lease is the second most common commercial real estate lease type. In a net lease, the tenant pays a monthly rent to a landlord and part or all the expenses associated with real estate ownership including maintenance, repairs, insurance, and taxes. Net leases often allow the tenant more flexibility in their use of the commercial real estate. If you need to modify the commercial real estate you are leasing, this type of lease may be the best option for you.
A triple net lease is very similar to a net lease in that the tenant pays for most or all the operating costs associated with the commercial real estate. These are most often free-standing buildings in California.
A shopping center or strip mall lease in California is aptly named. The tenant will pay a rate per square foot of the facility and some of the operating costs shared by the common areas of the shopping center. These usually include a portion of the property taxes, structure insurance, maintenance, repairs including parking areas, and delivery bays. While you may pay more for a shopping center space, it can be an ideal option to gain more customers, especially if the shopping center is heavily trafficked.
The final and most involved type of lease is a land lease or ground lease. This involves a tenant leasing a parcel of land in California with the intent to build property of some sort on the lot. While the buildings are purchased and maintained completely by the tenant, upon expiration of the lease, all buildings, improvements, and the property reverts to the owner of the land. These are typically very long-term leases, ranging anywhere from 5 years to 100 years or more.