SVN Coastal Commercial helps connect prospective renters, landlords
Leasing is a fact of life for a lot of businesses. But the variety of available leasing options — and how to secure them – isn’t always clear to business owners.
Businesses that rent their facilities often have several choices at their disposal. A single-net lease, for example, requires the tenant to pay only the rent and property taxes. Some tenants opt instead for a double-net lease, which also requires the tenant to pay insurance premiums.
There’s a third option, one that offers distinct benefits to both tenant and landlord: the triple-net lease. SVN Coastal Commercial often helps navigate these leases for its clients.
In a triple-net lease, the tenant pays the property taxes, insurance, and maintenance costs. While this arrangement may, at first glance, seem to benefit only the landlord, it offers some advantages to the tenant as well.
Longer occupancy, lower rent
One of those advantages is that tenants are more likely to enjoy long-term occupancy, sometimes up to 20 years. Longevity at a particular location is an important factor for many public-facing businesses, so this can make triple-net leases desirable for both parties. A business that stays at a given site for many years maintains a geographic familiarity with the community. From the landlord’s perspective, it’s beneficial to be able to shed the burden of fixing structural issues on the property. It can be a win for both sides.
Another advantage of triple-net leases is that prospective tenants can often negotiate for lower rent, based on the fact that the lease entails these extra financial responsibilities.
The most apparent benefit for landlords is the reduction of risk. The triple-net lease allows them to secure tenants over the long term. When tenants cycle in and out, there’s always a chance of the property sitting unoccupied — a bad state of affairs for the landlord and the property’s investors. Triple-net leases help diminish this revolving door and make for a more stable investment.
These leases are also good for the property owner because they make the tenant responsible for damages that insurance doesn’t cover. Even if the tenant pays for the insurance, there can always be accidents and harm to the property that lies outside the scope of normal coverage. With a triple-net lease, the tenant fixes the damage even when it’s not covered.
Finding the right tenant or finding the right space
Naturally, a long-term relationship of this kind will require a careful selection of a tenant. It’s important to find one with strong financial credentials and creditworthiness. The last thing a property owner wants is to have a renter default after entering one of these contracts.
A triple-net lease might appear to favor landlords but that does not have to be the case. If you have the experience of a skilled advisor who can assist you in negotiations, a triple-net lease could be a financial benefit to your company. Use SVN’s expertise to make sure your real estate investment or new space works for, not against, your goals and potential.
SVN Coastal Commercial Advisor’s connections can help locate the right tenant for a given property owner, and vice versa. Bringing people together is one of our many strengths. If you’d like to know more about leasing, we encourage you to talk to one of our local advisors. Their expertise is at no cost to businesses looking to lease space, and they can help you every step of the way.