Commercial Real Estate Leasing

It’s essential to understand the basics of commercial real estate leasing, before entering into a commercial real estate lease. Whether renting space for your business or relocating, there are a few things to keep in mind. These include the Rules of the Game, Building-out costs, Option to purchase clauses, and commercial real estate leasing costs.

Rules of the game

When entering a commercial lease, there are specific rules and obligations that the landlord and tenant must follow. These rules are often called CC&Rs, or covenants, conditions, and restrictions. These rules and limitations are set by the landlord and are supposed to be followed by the tenant. When entering a lease, obtain a copy of the CC&Rs in writing. It is important to understand these rules because the landlord is responsible for enforcing them.

SEE ALSO: Buying Commercial Real Estate

Cost of leasing commercial real estate

If you’re leasing commercial property, you need to understand the cost of leasing it. Most property managers and realtors will give you a quote based on the property’s square footage. This figure may be misleading, depending on the type of space. To get a more accurate estimate, multiply the quote by the square footage. If you’re leasing a building for multiple tenants, you’ll also need to factor in the cost of common areas.

Many factors affect the price of commercial real estate. For example, the rent per square foot of a building depends on several factors, including location, amenities, and infrastructure. A Class A building will generally have higher amenities and updated construction, while a Class B building may be older and have less.

Are you interested in a commercial real estate lease?

Building-out costs

Building-out costs for commercial real estate leasing can vary widely depending on the market and the type of space. Building age and condition have a significant impact on the cost. Older buildings may contain re-used components, which can lower the overall cost. The type of space also has an impact on the cost, as specialty spaces often demand higher build-out costs than generic office space. For example, law offices require expensive furnishings and finishes.

Building-out costs are usually calculated as the average price per square foot. While these costs are fairly standard, each build-out is unique. A tenant should determine what their needs are before requesting a quote.

SEE ALSO: Commercial Real Estate Financing

The option to purchase clause in commercial real estate lease

Including an option to purchase clause in a commercial real estate lease can benefit both parties. It gives the tenant the right to purchase the property at the end of the lease term. The clause must clearly describe the steps involved in exercising the option and closing the purchase. It must also comply with state and local laws.

When drafting an option clause in a commercial real estate lease, landlord-sellers should consider several issues. These considerations may include the value of the rent for which the option is granted and the importance of the tenant to the project. Moreover, a tenant may have different responsibilities than the landlord. In this case, the option to purchase clause should clearly outline the landlord and tenant’s responsibility. It should also include any applicable maintenance, repair, and TICAM expense requirements.

Check out our sister company Calcore Mortgage!

Abatement factors in commercial real estate leasing

Abatement factors are essential to consider when negotiating lease terms. For example, if the landlord offers a tenant one or two months of rent-free, that would be an excellent concession for the tenant, but it is not a guarantee. When comparing different leasing options, it is crucial to consider the entire cost of the property, including the abatement.

Abatement periods usually last for a specified amount of time. In some cases, the abatement period can be longer, for example, if the property needs extensive repairs. In this case, the abatement period can run from a few weeks to several months, depending on the length of the construction.

To get in touch with us
Call: (855) 855-0080