Office Rent 101: The Key Difference Between NNN and Gross Leases 💡 Understanding Lease Structures: Triple Net (NNN) and Gross Leases each have distinct cost structures. If you're comparing $20.00 per square foot NNN to $35.00 gross, the answer isn't as obvious as it seems. NNN Explained: Base rent excludes property taxes, insurance, and maintenance costs. Tenants cover their utilities and pro-rata share of common area expenses. Gross Leases: Typically include most expenses, offering simplicity. 📌 Tip: Always ask your landlord or broker what's included in the quoted rent to truly gauge the cost of occupying the space. Read more here: https://lnkd.in/eNc9E_UM #CommercialRealEstate #NNNLease #OfficeRent101
Hyatt Commercial Real Estate’s Post
More Relevant Posts
-
Office Tuesday Managing expenses is crucial in office real estate. In the Central Valley, office building owners face various costs. These include maintenance, utilities, property taxes, and insurance. Maintenance is essential to keep the property in good condition and attract tenants. Utilities like electricity and water can add up, so it's important to monitor usage. Property taxes vary but are a significant expense that owners must budget for. Insurance protects the building from unexpected damages and is a necessary cost but has increased heavily in recent months. Marketing expenses are also important to attract and retain tenants. Additionally, administrative costs for managing leases and tenant relations should be considered. Understanding and managing these expenses helps maximize profits. Efficient expense management can make a big difference in the bottom line. By keeping an eye on these costs, owners can ensure their investment remains profitable. #realestate #business #commercialrealestate #investing #diversify #build #grow #challenge #results #service #professional #modesto #california #ca #stanislauscounty #centralvalley #investor #invest #REI #passiveincome #turlock #sacramento
To view or add a comment, sign in
-
Class A office net effective rents, which factor in concessions, are down. Length of leases are down too. TRD article Elizabeth Cryan: https://lnkd.in/euABeijm
To view or add a comment, sign in
-
-
Phil Mobley, thanks for sharing this important information on rollover leases. Based on the article, the larger the lease, the more likely it is that it may not mature until several years from now. One data source using their data for leases of 50,000 SF in large, gateway cities indicates that today, 75% of those leases remain in force rolling over almost equally each year between now and 2030. Since most of these leases are with Fortune 500 companies with large teams of knowledge workers, they will all be most impacted by AI staff shrinkage during the 6 years remaining in the decade. At the same time, we know that the hybrid workplace continues to dominate these users. The drivers of change in work continue to push distributing more work outside the office than the reverse. While demand remains strong for several new, Class A+++ office properties built since 2020, demand softens directly related to the age of the other properties which includes 95% of the market. Given all the factors that suggest that less office space is better, both in terms of cost reduction and improved productivity, it is only logical to believe that continued negative absorption for most of the market is likely through the balance of this decade.
The rollover of pre-pandemic leases has been perhaps the single best explainer of #office performance over the past 18 months, and that figures to continue. So how much exposure is left? The short answer: A lot, and it is not evenly distributed. CoStar US subscribers can read more here. #CRE
To view or add a comment, sign in
-
A high Base Rent on your office lease can kill your business slowly 5 points tenants unwittingly agree to that can also kill you, but quicker: - Annual escalations tied to CPI or >3% (compounds fast!) - Personal Guarantee (not a market requirement) - Termination Clause (harms subleasing ability) - Restoration Clause ($20/psf demo bill on the way out!) - Bad clauses for Landlord CapEx, Code Compliance and RE Tax assessments) Amateurs fight on the dollars PSF, Pros know where to look for the skeletons!
To view or add a comment, sign in
-
For commercial office tenants, reaching the end of a lease isn’t as simple as packing up and moving out. Here are some tips on how to approach your end-of-lease obligations: https://lnkd.in/e8r9aHeK
To view or add a comment, sign in
-
-
This is an interesting chart by CoStar showing that rent growth is still on the rise overall, even in this depressed office market (but far below overall inflation). There are a few reasons for this: #1 Construction pricing is crushing landlords and making deals harder to pencil out. They need to keep rates high to get a return on their investment. #2 Leasing incentives such as free rent lower the amount of rent paid. Negotiated rent and the quoted rental rate are two different things! Pays to have an office specialist know how deals are structured in each market to get the best deal.
To view or add a comment, sign in
-
-
Take a look at our AVANT U.S. Office Leasing Trends by Industry: A Comparative Analysis 📊 This latest analysis reveals a few key dynamics: - Banking, finance, insurance, and real estate tenants pay the highest rents for premium spaces, averaging over 7-year leases. Whereas Law firms sign the longest leases at 94 months. - Consulting, research, accounting, and recruiting tenants see the widest rent gap—$13 psf—due to large concessions. - Tech industry favors shorter leases at 63 months, shrinking the rent gap, and Media, PR, telecom, and entertainment tenants have a tight rent gap and the lowest base rents across major industries. Explore the full analysis and graph by clicking the link below! #AYAgencyLeasing #IndustryTrends
U.S. office leasing trends by industry: a comparative analysis of rental rates and lease terms
avisonyoung.us
To view or add a comment, sign in
-
𝐒𝐢𝐠𝐧𝐢𝐧𝐠 𝐚 𝐍𝐞𝐰 𝐎𝐟𝐟𝐢𝐜𝐞 𝐋𝐞𝐚𝐬𝐞? 𝐁𝐞𝐰𝐚𝐫𝐞 𝐭𝐡𝐞 𝐅𝐨𝐥𝐥𝐨𝐰𝐢𝐧𝐠 𝐎𝐟𝐟𝐢𝐜𝐞 𝐋𝐞𝐚𝐬𝐞 𝐂𝐥𝐚𝐮𝐬𝐞𝐬 Corporate tenants, beware! Signing a new office lease can be fraught with hidden pitfalls that could cost your business dearly. Here’s what you need to know to protect your interests: 🔹 𝐎𝐩𝐞𝐫𝐚𝐭𝐢𝐧𝐠 𝐄𝐱𝐩𝐞𝐧𝐬𝐞 𝐂𝐥𝐚𝐮𝐬𝐞𝐬: Ensure clarity on what expenses you are responsible for. These can include utilities, property taxes, insurance, and maintenance fees. Ambiguities here can lead to unexpected costs. 🔹 𝐑𝐞𝐧𝐭 𝐄𝐬𝐜𝐚𝐥𝐚𝐭𝐢𝐨𝐧 𝐂𝐥𝐚𝐮𝐬𝐞𝐬: Understand how and when your rent will increase. These clauses often tie rent hikes to inflation or market rates, which can significantly impact your budget over time. 🔹 𝐒𝐮𝐛𝐥𝐞𝐚𝐬𝐞 𝐚𝐧𝐝 𝐀𝐬𝐬𝐢𝐠𝐧𝐦𝐞𝐧𝐭 𝐂𝐥𝐚𝐮𝐬𝐞𝐬: Know your rights to sublease or assign the lease. This flexibility can be crucial if your business needs change, allowing you to mitigate costs by subleasing unused space. 🔹 𝐌𝐚𝐢𝐧𝐭𝐞𝐧𝐚𝐧𝐜𝐞 𝐚𝐧𝐝 𝐑𝐞𝐩𝐚𝐢𝐫 𝐂𝐥𝐚𝐮𝐬𝐞𝐬: Determine who is responsible for repairs and maintenance. Landlords may try to pass on these costs to tenants, so it’s essential to negotiate these terms upfront. 🔹 𝐓𝐞𝐫𝐦𝐢𝐧𝐚𝐭𝐢𝐨𝐧 𝐂𝐥𝐚𝐮𝐬𝐞𝐬: Be aware of the conditions under which the lease can be terminated. Understanding these terms can help you avoid penalties and plan for contingencies. Reach out to us today for help navigating these complexities and secure the best lease terms for your business! #CRE #OfficeLease #TenantTips #iOptimizeRealty
To view or add a comment, sign in
-
-
As a business owner or controller leasing office space, it's important to ensure your Landlord is correctly billing your operating expense passthrough charges during Reconciliation Season. Our team has found that mistakes in calculating expenses are all too common. Our latest newsletter provides simple checks to determine if there is a problem that requires further investigation. Reach out to us if you need assistance reviewing your operating expense bill. #tenantrepresentation #tenantrep #occupierservices #operatingexpenses #commercialrealestatebroker #commercialrealestate
Are You Paying More Than Required?
growth.cherryspeir.com
To view or add a comment, sign in
-
Do you still believe in the office sector? If your answer is yes (and it better be), here’s how to match risk and return in your office investment 👇 The first thing you’ll need to do is conduct a comprehensive financial analysis to evaluate the risk-return profile of your investment. Johan Hajji recommends including different conditions, “such as changes in interest and occupancy rates and operating expenses”. Then, consider: - Targeting tenants with a strong payment history to mitigate risks. Since offices often enjoy lower interest rates thanks to the reliable cash flow from long-term leases, the current high vacancy rates and the creditworthiness of tenants can impact your financing terms, which consequently will impact your returns. - Focus on achieving a high debt service coverage ratio. Sufficient cash flow to cover debt obligations leads to better loan terms and lower interest rates, and, again, more returns. - Invest in high-demand, prime locations to reduce the risk of prolonged vacancies. - Exploring alternative financing methods to find one that provides flexibility and long-term viability. By carefully selecting your financing options, you can effectively match risk and return in your office investment. To learn the best financing options for office buildings and other property types, check out our latest blog: https://lnkd.in/eNXHDdhb #CRE #CREInvestment #CREMarket #CREInsights #CommercialRealEstate #CREFinancing #CREOffice #Office #FinancialAnalysis
To view or add a comment, sign in
-
More from this author
-
Light Business Park: Rare Opportunity to Meet Demand in the Marketplace
Hyatt Commercial Real Estate 1mo -
Anne Arundel County at a Glance (August 2024)
Hyatt Commercial Real Estate 3mo -
Building a Strong Foundation in CRE: Insights from Justin Mullen, President at Hyatt Commercial
Hyatt Commercial Real Estate 5mo