Since DFW has a commercial vacancy rate between 21% and 25%, office space is a readily available investment for Texas landlords. However, because commercial leases are different and more complex than residential alternatives, taking the leap can feel daunting.
Here, we'll help you manage great Fort Worth investment opportunities by demystifying commercial lease analysis, so read on for more information.
What Is Commercial Lease Analysis?
Commercial lease analysis means evaluating your property and taking a closer look into lease terms. Some things to look into with the help of a Dallas property management company include:
- Base rental rates
- Property taxes and utility costs
- Repair and maintenance responsibilities
- Utility-related responsibilities
- The duration of the lease
- Security deposit costs and terms
- Renewal options
- Rent escalation over time
Understanding the ins and outs of your leases helps you make good decisions over time. You'll get the most income possible from your real estate investment while still remaining competitive in the DFW rental market.
The Types of Commercial Leases
Broadly speaking, there are three common types of commercial leases. The first, a gross lease, is also called a full-service lease. The tenant's base rent covers all expenses like:
- Utilities
- Maintenance costs
- Property taxes
This makes the base rent higher than other properties would offer. However, it appeals to many commercial tenants because it's the only fee. It's fixed and easy to budget for.
A net lease is different because tenants pay both a base rent and several pre-determined operating expenses. The rent is lower, which is immediately appealing to those searching for commercial space. However, they must also pay other fees.
Finally, a modified gross lease or modified net lease is a happy medium between these two things. The base rent is fixed, but the landlord and tenant negotiate terms about operating expenses together. This ensures that everyone is on the same page about lease terms.
Understanding Fair Terms
Commercial office space has a $26.83/square foot average rental rate in Dallas. This provides an incentive for renters to choose your building over others. Note that several factors will impact how much rent you can charge, including:
- Location
- Building amenities
- Condition of the property
A property management expert can help you decide on fair rental rates. They understand the different types of DFW commercial property including:
- Office buildings
- Warehouse space
- Retail storefronts
- Cafe/restaurant space
They can help real estate investors navigate the nuances of various property types. Plus, their comprehensive understanding of the Dallas real estate market makes setting lease terms a simple and efficient process.
You won't need to worry about uninformed rookie mistakes!
Implement Top Commercial Lease Strategies With Expert Help
Understanding the nuances of commercial lease analysis is critical when you purchase a business investment.
A Dallas property management company can help you work through types of leases and help you glean more lease agreement insights over time. PMI DFW Properties is excited to help you thrive with top commercial real estate tips, so contact us to learn the ins and outs of your investment property.
