Unlock the keys to successful commercial real estate leasing as we dive into 5 alternative lease types that can transform your renting experience. Discover a range of options customized to your business needs. Join us on this journey in Chicago and Indianapolis as your guide to go through the dynamic terrain of commercial leasing. Here’s what we are about to discuss:

1. Gross Lease
2. Net Lease
3. Percentage Lease
4. Indexed Lease
5. Step-Up Lease

1. Gross Lease

So, a gross lease is like the VIP package of renting. You pay a fixed rent, and the landlord takes care of all the boring stuff – taxes, insurance, utilities, maintenance, repairs, you name it. No surprises or hidden fees for you!

But, heads up, the rent might be a bit steeper since it includes all those perks. Perfect for folks who just want a hassle-free renting experience without dealing with property management headaches.

Now, in the realm of commercial real estate, you’ve got options! First up, the Gross Lease – you pay rent, and the landlord handles the nitty-gritty expenses. Then there’s the Net Lease – you chip in for base rent plus some or all the extras.

Feeling fancy?

Go for the Percentage Lease – pay base rent and a slice of your sales. Ground Lease lets you lease land and take charge of building and upkeep. Need a custom space? Build-to-Suit Lease is your go-to – the landlord builds or tweaks it to fit your needs. If you’re feeling generous, Sublease it to someone else.

And lastly, Sale-Leaseback – sell the property but lease it right back. It’s like real estate acrobatics! Always set your goals and get pro advice to find your perfect match keeping in mind what suits you the best.

2. Net Lease

A net lease is a type of lease where the tenant pays a lower base rent and some or all operating expenses, depending on the degree of the net lease. Net Leases are the Opposite to gross leases and there are several variations of net leases:

There are three main types of net leases: single net, double net, and triple net.

– Single Net Lease (N Lease): The tenant pays base rent plus a portion of the property tax.

– Double Net Lease (NN Lease): The tenant is responsible for base rent, property taxes, and insurance premiums.

– Triple Net Lease (NNN Lease): The tenant pays for base rent, property taxes, insurance, and maintenance. This is common for freestanding commercial buildings.

A net lease is suitable for tenants who want to have more control over the property and benefit from lower rents.

3. Percentage Lease

A percentage lease is a type of lease where the tenant needs to pay a fixed rent plus a percentage of the gross sales or revenue generated from the business. This means that the rent will vary depending on the performance of the tenant’s business which is beneficial for the commercial business owner in Chicago.

At CARMEN Corporate Services in Chicago, our consultants observed that percentage leases are particularly advantageous for retail businesses seeking office/business space in the city. These leases provide a flexible cost structure, ensuring stability during market fluctuations.

The shared success model aligns the interests of both tenants and landlords, making it an attractive option for both parties. In the competitive city like Chicago, these types of leases enable businesses to be in prime locations without the immediate stress of high fixed rents.

4. Indexed Lease

An indexed lease is a type of lease where the rent is adjusted periodically based on an index, such as the consumer price index (CPI), the market rent, or the landlord’s expenses. This means that the rent will increase or decrease according to the changes in the index.

An indexed lease is often used for long-term leases, where the landlord wants to protect the value of the rent and the tenant wants to avoid sudden spikes in the rent. An indexed lease is suitable for tenants who want to have some stability and transparency in their rent.

Restaurants, cafes, apparel stores, fitness centers, home improvement centers and many other of the retail businesses could consider this particular type of lease to avoid sudden changes due to economic inflation.

5. Step-Up Lease

As one of the top commercial real estate firms in Indianapolis and Chicago, we have seen many businesses boost within a short span of time with a step-up lease.

A step-up lease is a type of lease where the rent increases by a predetermined amount or percentage at specific intervals, such as annually or biannually. This means that the rent will grow over time according to a fixed schedule.

This type of lease is often used for new start up or growing independent businesses, where the landlord wants to offer a lower initial rent and the tenant expects to have higher revenues in the future. A step-up lease is suitable for tenants who want to have some flexibility and affordability in their rent.

Are you looking for a competent Commercial leasing firm for your business in Chicago, Indianapolis or around. Give CARMEN Corporate Services a call!