For a landlord, it's generally easier to administer a modified gross lease
, and a tenant can generally plan on what the rent will be a few years out.
We mentioned above about a lease being a gross lease
or a net lease.
On the other hand, in a gross lease
, tenants do not get incentives to practice energy and water conservation in their units if the savings are not directly reflected in their monthly utility bills.
A return to gross leases
, however, can benefit both landlords and tenants, as well as foster a building's sustainability.
When the subject property is leased exclusively on all gross leases
, this tax rider is combined with the appropriate capitalization rate and, in combination, become the loaded cap rate.
These deals have taken many forms including gross lease
, net lease.
For example, the actual occupancy costs for a $10.00 per square foot (PSF) Net lease is going to be much higher than for a $10.00 PSF Gross lease
. Tenants must be aware of the differential to be able to make a sound financial comparison.
The Third Quarter numbers show only a statistically irrelevant drop in average gross lease
rates and minor increase in overall vacancy rates as compared to this year's First Quarter statistics.
The second quarter's average asking gross lease
rate is $20.88 per square foot (plus tenant electric), up from last year's $18.64 rate for the same time period.
A new, 40,000-square-foot, Wiz electronics superstore will open at The Old Bridge Gateway in Spring, 1994, and a new, 10,000-square-foot Old Country Buffet restaurant is scheduled to open in the Fall, enlarging the center's gross lease
area (GLA) to 240,000 square feet.
The property will be offered with a $600,000 per year gross lease
and has excellent user potential.