Every Lease is Different: Understanding Commercial Lease Variations
In the world of commercial and industrial real estate, there is one Golden Rule that stands the test of time: Every Lease is Different.
Many tenants assume that if a lease agreement applies to one property, it must apply elsewhere, even with the same landlord. However, this is not the case. Commercial lease agreements are tailored to the specific needs and negotiations between the parties involved, which means variations are inevitable.
Why Are Lease Terms Different?
One of the most common questions from commercial tenants is: “Why do I have to pay a rental increase each year, while the tenant next door doesn’t?” The answer is simple, every lease is unique.
Leases can differ based on:
Rent Reviews
Some leases include annual rental increases, while others may have fixed rent for a set period.
Outgoings & Expenses
Costs such as insurance, owners’ corporation levies, and maintenance fees can be structured differently in each lease.
Lease Length & Conditions
The duration of the lease and any additional incentives or concessions vary from agreement to agreement.
How Lease Variations Work
Some landlords choose to incorporate outgoings into a slightly increased rental rate, allowing tenants to pay a predictable amount each month rather than experiencing fluctuating expenses.
Similarly, a tenant may agree to pay a slightly higher monthly rent in exchange for lower rent reviews or even a rent-free period at the beginning of the lease. This can be especially beneficial for businesses with significant setup costs, such as restaurants or manufacturing companies, helping them to manage initial expenses more effectively.
Understanding Repair Liabilities
Another key lease variation relates to responsibility for repairs. Some fixtures and fittings, such as air conditioning or kitchen equipment, may have been left by a previous tenant. In such cases, the landlord may allow the new tenant to use them but stipulate that they accept full responsibility for maintenance and repairs.
Read Your Lease Carefully
Before acting on advice from a friend or neighboring tenant who says, “You shouldn’t have to pay that!”, always refer to the lease agreement you signed, and speak to your commercial real estate leasing expert at First National Real Estate Neilson Partners.
The terms and conditions you agreed to will dictate your obligations, and remember, Every Lease is Different.
Meta Title:
Every Lease is Different: Key Factors in Commercial Lease Agreements
Meta Description:
Discover why every commercial lease is different and how variations in rent reviews, outgoings, and lease terms impact tenants and landlords. Learn what to consider before signing your lease.
Meta Keywords:
commercial lease agreements, lease variations, rent reviews, commercial property, industrial leases, tenant obligations, lease terms, landlord responsibilities, rental increases, outgoings in leases
