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What Are The Things To Look Out For In An Industrial Gross Lease?

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Leasing is the main source of income for commercial real estate owners along with flipping of property. Such leases like IG lease come up with options e.g How much rent should be charged?  Duration of the lease last? Which lease should be used? etc.

This article covers-

  1. An Industrial Gross lease.
  2. The structure of an Industrial Gross lease.
  3. Advantages of  Gross lease.
  4. Lease Calculator.
  5. How Sands Investment Group can help.

1. An Industrial Gross lease: It is a modified gross lease for multi-tenant industrial buildings used by the land-lords Tenants pay for a share of utilities and services that are provided by the landlord. It’s the Landlords responsibility to pay property taxes and insurance. The lease specifies exactly the services which are provided by the landlord. An IG lease is a combination of modified and triple net lease. It can also be taken as a net lease where the tenant has to pick up some property expenses. It is also called a modified gross lease because the landlord provides services like insurance, repairs and property taxes with the tenant’s rent.

  1. The form of IG lease –The landlord should know how to form their IG lease as it may affect financing on Industrial buildings.
  2. The Concept Of Base Year- Special terms like base year references to the structure of IG lease. The base year is the first year of tenants’ lease. It includes taxes, insurance, maintenance and other utility expenses. It also refers to the cost for operating expenses in the first year.
  3. Common Area- An area in a building that serves multiple tenants e.g lobby, vending machine area, elevators etc. It may also include locker rooms and security offices. An IG lease also specifies that the tenant will share the expenses of (utility and maintenance ) of the common area.
  4. Tenant Expenses: The tenant may pay for extra services as pick up of garbage according to the terms and conditions of the lease. 20 to 25 % may be added to the cost of services besides the rent. The landlord bears other expenses. But if you use a base year the tenant will have to pay expenses exceeding the first-year cap.
  5. IG Rent – It often appears with the lease. It simply means that the tenant shares the building operating expenses. In other words, the rent includes shared expenses.
  6. Advantages of IG lease- Through the use of base year caps, an industrial gross lease landlord some protection against rising expenses. Therefore expenses are passed to the tenants by the landlords. Tenants enjoy the services provided by the landlord.
  7. Lease Calculator- This calculator with advance mode allows the tenant to calculate the base rent and other operational expenses. These expenses depend on the terms of the lease. This is useful for an IG lease as only some expenses belong to the tenant.
  8. How Sands Investment group can help- This investment group will help in arranging finance for commercial projects with no limit. For complete financial services, contact such groups. Through a network of private investors and banks, these investment groups can help you finance buying or renovating an industrial and warehouse property.

IG modified gross lease and modified gross lease are almost the same. A triple net is also beneficial because it specifies that the tenants are responsible for taxes, insurance and maintenance of common areas

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