Leasing 101: A Guide to Navigating Commercial Property Agreements in Florida
Are you Thinking about leasing a commercial or industrial property? Leasing is more than just securing square footage—it's about creating an environment where your business can grow and stand out.
It can be a great option if you're operating a restaurant, a retail space, or another type of business. However, it's important to understand your options and the key details before signing a long-term lease and being informed about the leasing process can save time, money, and stress.
Breaking Down Commercial Leasing Options
When leasing commercial property, it's all about understanding the options. Here's the deal:
Net Lease: Think lower base rent, but with a catch. You’ll also cover additional costs like property taxes, insurance, and common area maintenance (NNN/CAM) based on your square footage. It’s predictable cash flow for landlords and shifts more risk to tenants. A net lease may feel like splitting the bill at dinner with friends—until you realize you're the one picking up dessert, appetizers, and parking fees!
Gross Lease: Pay one larger monthly rent that bundles everything—NNN/CAM expenses included. It's easier for tenants to budget and reduces surprises, making it ideal for multi-tenant buildings. In a gross lease, if your monthly rent is $5,000, that's your all-in cost—no surprise whack-a-mole bills for taxes or maintenance popping up.
Modified Gross Lease: A mix of gross and net, where the tenant & landlord share costs.
Your choice boils down to what works best for your business. Opening a coworking space? Launching a fitness studio? Depending on your goals, one lease type might be the better fit.
Is Leasing the Right Move?
If your business is bursting at the seams, leasing might seem like the obvious choice—but don’t overlook the perks of owning. Buying commercial property can turn your rent money into a long-term asset.
Here’s the breakdown:
Tax Advantages: Mortgage interest, property depreciation, insurance, and maintenance costs are all deductible.
Equity Growth: Property values typically appreciate, meaning you can cash in later on.
Control: Owning gives you the freedom to modify the space without restrictions.
But ownership isn’t for everyone. If you’re a startup or want to avoid the upfront costs and responsibilities of ownership, leasing might be your best bet.
Before signing, here are some key factors to weigh:
How Much Space Does Your Business Need? Think about where your business is headed—hiring more staff, expanding services, or launching new products—and weigh the pros and cons of your current space. A clear space analysis will help you pinpoint exactly what your business needs to thrive.
Have You Calculated Your Business Cost? Factor in utilities, equipment setup, moving expenses, and other operational costs to set a realistic budget for your lease. Understanding these numbers upfront will help you nail down an average monthly cost that fits your business.
Have You Done Your Location Research? Location is everything—it impacts foot traffic, customer access, and even lease terms. Beyond parking and amenities, consider zoning laws, environmental hazards, and how the area complements your business. And don’t forget to have a comprehensive inspection to avoid unpleasant surprises down the road.
Consider Your Lease Options Understanding the three main lease types—gross, net, and modified gross—is key to making the right choice. Each has its pros and cons, so pick the one that aligns with your needs and budget.
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