Types of commercial property leasing

Choosing the right kind is a critical step towards business growthImage Credit: Supplied

Commercial property leasing is an entirely different process from residential leasing. Taking wise decisions before signing a commercial lease agreement is greatly important.

Investors are advised to check the condition of the property at the time of the deal and calculate the maintenance or service cost. They should also ensure that the property is in usable condition during handover. All confusions about the terms “minor maintenance” and “major maintenance” should also be cleared before signing the agreement.

The important categories of commercial leasing in the UAE are:

Gross lease – This type requires the tenant to pay the amount stated in the contract as rent. Other services like property maintenance cost or insurance charges will be handled and paid for by the landlord. This type of leasing includes full service and mainly suits office buildings.

Triple net (NNN) lease – This type of lease will have the tenant take responsibility for all charges like maintenance, servicing and insurance on top of the fixed rental amount. This is usually difficult for tenants leasing an old building, although the rent will be comparatively low.

Land lease – As the name indicates, land lease is all about leasing the land itself. This is done for a longer term. In the UAE, some plots of land are leased for a maximum of 99 years. The tenant can lease the land and construct structures on it depending on his business needs. When the lease expires, the property ownership reverts to the landlord.

Modified net lease – This type of lease allows the tenant and the landlord to equally share all the expenses that occur in due course such as for property maintenance, building services and insurance. Industrial space, retail units and multi-tenant properties can be leased this way.

With proper planning, leasing a commercial property will hugely benefit your business.

Handy Hints:

* Leasing a commercial property demands thorough research

* You may hire experienced professional business consultants

* Select the best leasing type in order to advance your business

Source: Asha Das, Special to Properties

The writer is a freelancer


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