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Types of Commercial Leases: A Comprehensive Guide to Industrial Spaces

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    The commercial real estate (CRE) market is complex and deadline-driven, especially for anyone renting warehouse space or another industrial property. Nevertheless, these spaces’ leases are tailored to businesses that require storage, manufacturing, or distribution facilities. Understanding lease structures, costs, and customization options can help you negotiate a contract that supports your needs. But ultimately, working hand in hand with a knowledgeable commercial real estate agent is the best way to find your ideal space while avoiding costly pitfalls.

    Loudoun County, VA, businesses seeking to expand their operations through warehouse renting or investing in CRE can turn to The Genau Group for support. Our experienced commercial real estate agents provide personalized guidance to match your business with complementary properties. Along with our deep understanding of lease structures and the local market, we’re committed to making the process seamless and efficient. Call us today at (202) 735-5382 to find the ideal industrial space.

    Review the types of commercial leases available to businesses:

    Understanding Leases for Industrial Properties

    Businesses that require large operational spaces can meet their needs by leasing industrial properties. Such properties come in various forms, including:

    • Warehouses: Designed for storage and distribution, warehouses feature open layouts and high ceilings.
    • Manufacturing Facilities: Equipped for production processes, these facilities often have heavy power supplies and specialized layouts.
    • Flex Spaces: These hybrid spaces combine office and industrial uses, offering versatility for businesses.

    All industrial space leases differ significantly from traditional office or retail space agreements, as the industrial variety caters to specific operational needs and long-term usage. For example, businesses leasing a warehouse typically sign on for 5 to 10 years to accommodate their significant investments in equipment and the customization that industrial spaces often require.

    4 Common Types of Commercial Leases

    1. Property Management Assistant 

    A property management assistant is a common entry-level role in commercial real estate, which involves supporting property managers in overseeing commercial buildings. Primary responsibilities include tenant communications and organizing property documentation. With experience, this role can lead to becoming a full property manager, in which you would oversee properties independently.

    2. Net Lease

    A net lease shifts some operating expenses to the tenant. There are three primary variations:

    • Single Net Lease: The tenant pays rent and property taxes, while the landlord covers insurance and maintenance.
    • Double Net Lease: The tenant pays rent, property taxes, and insurance, with the landlord managing maintenance costs.
    • Triple Net Lease: The tenant handles rent, property taxes, insurance, and maintenance. This lease reduces the landlord’s responsibilities and gives tenants more control over property-related expenses.

    3. Modified Gross Lease

    Similar to a net lease, a modified gross lease offers a hybrid approach wherein costs are shared between the landlord and tenant. Typically, the tenant pays rent and a portion of operating expenses, such as utilities or maintenance, as negotiated in the lease agreement.

    4. Percentage Lease 

    In a percentage lease, the tenant pays a base rent plus a percentage of their gross sales revenue. This type is common in retail spaces where landlords benefit from the tenant’s success.

    What You Should Know Before Signing a Commercial Lease

    Zoning and Permitted Uses: Confirm the property is zoned for relevant business operations and ensure the lease permits those uses. Zoning restrictions can limit operations like manufacturing or distribution.

    Space Requirements: Evaluate whether the property’s size, layout, and infrastructure meet business needs. Consider factors such as ceiling height, loading docks, and parking for trucks or employees.

    Build-Outs and Modifications: Industrial tenants often need to customize the space to fit specific operational requirements. Clarify who (tenant or landlord) is responsible for these modifications and whether they must be undone at lease end.

    Maintenance and Repairs: Review the division of responsibility for property upkeep. Industrial leases often require tenants to handle routine maintenance while landlords manage structural repairs.

    Accessibility and Location: Consider proximity to transportation hubs, such as highways, ports, or railroads, to support logistics and supply chain needs.

    Expansion and Exit Options: Assess whether the lease allows space expansion or early termination if the business grows or changes direction. These terms provide flexibility for evolving needs.

    Rent Premium Warehouse Space in Loudoun County with The Genau Group

    Renting warehouse space is a significant commitment that demands careful planning and negotiation. Therefore, Loudoun County, VA, businesses should always seek guidance from a commercial real estate professional to ensure a favorable agreement. The Genau Group leverages our industry expertise and tailored approach so companies can feel confident in their CRE pursuits. Invest in commercial real estate today by calling (202) 735-5382!