Austin Office Space Lease Agreements
There are several types of office space leases that are available to you as a tenant and it is good to have a fundamental understanding of what they are and how they work. When it comes to lease negotiations, keep in mind it is always a best practice to ask a professional commercial real estate broker like Shire Commercial to represent you so you have no surprises.
Full Service Office Space Lease– this type of office lease includes all of your janitorial costs, electric and common area maintenance costs. You may see the letters “FS” next the to the lease rate when you are leasing an office space .
Net Office Space Lease – this is a type of office lease whereby the tenant pays a significant portion of the property taxes and insurance or operating expenses of the property incurred by the landlord of the office space lease in Austin. The tenant will also pay for your own electric and other utilities.
Triple Net Office Space Lease– this type of office lease is also known commonly as a triple net lease. This is an office space or warehouse space lease whereby the tenant pays for their prorated share of operating expenses that are incurred by the property owner or the landlord. These expenses are passed thru to the tenant, there is also language called base year expenses which means the first year you are occupying the office space or warehouse space which is your “base year”. Sometimes your broker can help you put a cap on the incremental increases; usually property taxes usually go up every year. Also it is important to note if the taxes go down, the savings would be transferred to you as the tenant.
Modified Gross Lease– this type of office space lease is a gross lease like a full service lease where the operating expenses are incorporated into base lease rate and you will most likely pay for your own electricity and utilities.
Percentage Retail Lease– a percentage retail lease is a type of retail lease that the tenant pays on that is tied to the tenant’s sales revenues. The percentage is negotiable and linked to your gross sales. An example would be 5% of all sales over $200,000 per year. Sometimes a tenant will have a percentage lease linked to your gross margins or net profits. This lease allows the tenant to get into a retail space at a lower rate thereby allowing the landlord to share in your profits as you move forward.
Austin Office Space Sublease- a sublease offers a tenant a way to sublet an office space potentially at a discount to current market lease rates. The challenge with sublease space in Austin is it is not commonly advertised on signage. Also, there is typically no tenant improvement allowances for improving the layout of the office space to meet your specific needs.