by admin | Dec 8, 2024 | Commercial Real Estate
What is a Modified Gross Lease in Commercial Real Estate?
A modified gross lease is a hybrid type of lease agreement that combines elements of both gross leases and NNN leases. Under this structure, the landlord typically covers the base operating expenses, such as property taxes, insurance, and maintenance, while the tenant agrees to pay for specific additional costs, like utilities or janitorial services.
In other circumstances, the Landlord sets a base year for the additional rent and the tenant pays the increase in CAM (Common Area Maintenance) and Real Estate taxes from the base year to the new year. The responsibilities are negotiated upfront, providing both parties with clarity and flexibility.
Key Points of a Modified Gross Lease
- Shared Costs: The landlord and tenant split increase in operating expenses based on terms outlined in the lease.
- Predictable Base Rent: Tenants pay a fixed base rent, covering agreed-upon landlord expenses.
- Flexibility: This lease type is tailored to meet the unique needs of both the landlord and the tenant.
- Cost Stability: While tenants pay for certain extras, they avoid the unpredictability of entirely net leases.
- Customizable: Negotiations determine which costs are covered by whom.
Example of a Modified Gross Lease
Imagine a tenant leasing 2,000 square feet of office space in a 10,000-square-foot building. The landlord includes property taxes, insurance, and common area maintenance in the base rent of $25 per square foot. The Landlord sets a base year for CAM and real estate taxes and the tenant pays the increase from the base year to the new year.
This arrangement allows the landlord to maintain property standards while providing the tenant with manageable costs and autonomy over their specific usage.
A modified gross lease strikes a balance, offering both landlords and tenants a fair, transparent, and adaptable lease structure tailored to their respective needs. It’s an excellent choice for businesses seeking cost stability without the complexity of a fully net lease.
Sharon Bogetz is a residential and commercial real estate broker with Century 21 Universal since 2019.
by admin | Nov 20, 2024 | Commercial Real Estate, Residential Real Estate
Last week in a 50-0 vote, Chicago’s City Council voted against Mayor Brandon Johnson’s proposal to increase property taxes. The proposed property tax hike was part of the mayor’s plan to address a $500 million budget gap for fiscal year 2025. It will still be a challenge for the Mayor to make up the shortfall Chicago is facing.
If you own property, you will be able to better manage your expenses. If you own residential or commercial property in Chicago, property taxes should not be a concern for your buyers. If you are buying property in Chicago, you should not expect a tax hike.
IF you are looking to buy or sell real estate in Chicago, call Sharon Kantor Bogetz at 847-370-9131. She currently has listed a residential condo for sale and a commercial property for rent in Chicago. She has been a realtor with Century 21 Universal since 2019.
by admin | Nov 19, 2024 | Commercial Real Estate
This is the second of a series of 3 blogs explaining the different types of commercial rent structures. A Triple Net Lease (NNN lease) is a common leasing structure in commercial real estate where the tenant assumes responsibility for the property’s operating expenses in addition to paying base rent. These operating expenses typically include property taxes, building/property insurance, and common area maintenance (CAM) costs which might include snow removal, security, water, garbage, parking lot maintenance, etc. NNN Leases are common in retail, office and industrial real estate, offering stability for landlords while tenants bear the risks and rewards of property-related expenses.
Key Features Of A NNN Lease:
- Base Rent: This is the fixed rental payment the tenant agrees to pay the landlord. It compensates the landlord for the use of the property and often depends on the location, size, and market demand.
- CAM Charges: Common Area Maintenance expenses cover the upkeep of shared spaces, such as landscaping, parking lots, hallways, or lobbies. This ensures the property remains functional and attractive. A tenant would pay their proportionate share of of the total CAM charges for the property. This may be a variable expense item.
- Pass-Through Costs: Property taxes and insurance are passed directly to the tenant. These costs can fluctuate annually, depending on tax assessments and insurance premiums. A tenant would pay their proportionate share of of the total CAM charges for the property. This may be a variable expense item.
- CAM and Pass-Through Costs may also be called Additional Rent in your lease agreement.
Example Of A NNN Lease:
Consider a retail strip center where a tenant leases a 2,000 sq. ft. space for $25 per square foot annually in base rent. In addition to the base rent ($50,000 annually), the tenant also pays their proportionate share of the property taxes, insurance, and CAM. If the total annual operating expenses for the center are $120,000 and the tenant occupies 10% of the center’s rentable area, their share of the pass-through costs would be $12,000. Thus, the tenant’s total annual cost in this NNN lease would be $62,000.
If you are looking for a commercial space, contact Sharon Bogetz at 847-370-9131. She’s been working with owners, investors, healthcare providers and commercial tenants since 2019.
by admin | Nov 4, 2024 | Commercial Real Estate
This a the first of a series of 3 blogs explaining the different types of commercial rent structures.
When leasing commercial space, understanding the type of lease agreement is crucial. One common lease type is the gross lease, which is also sometimes referred to as a full-service lease. But what exactly does a gross lease entail, and is it the right choice for your business? Let’s dive into the basics and look at a practical example.
What is a Gross Lease?
A gross lease is a lease structure in which the tenant pays a fixed rent amount, while the landlord covers most, if not all, of the property’s expenses. These expenses can include property taxes, insurance, maintenance, and often even utilities. For tenants, this type of lease provides predictable monthly costs, which can make budgeting simpler and easier.
Because the landlord assumes responsibility for property expenses, gross leases are often found in office buildings and shared commercial spaces where landlords manage the majority of building operations.
Imagine renting office space in a large office complex with a gross lease. As the tenant, you pay a set amount each month. This amount is inclusive of the costs associated with property taxes, building insurance, and maintenance. The landlord handles all maintenance and operational expenses, such as cleaning common areas, maintaining landscaping, and ensuring the building is secure.
Example of a Gross Lease
With this setup, you’re able to focus on running your business without worrying about additional costs. Gross leases can be ideal for businesses looking for predictability and simplicity in their lease agreements.
Is a Gross Lease Right for You?
If you value consistent expenses and prefer not to manage variable costs like maintenance and insurance, a gross lease may be an excellent fit for your business. However, it’s essential to clarify which specific expenses are covered under your gross lease, as lease structures can vary.
Sharon Kantor Bogetz, MBA is a commercial real estate broker licensed in Illinois and Indiana. She works with owners, tenants and investors.
by admin | Sep 22, 2024 | Commercial Real Estate
When selling or leasing a dental office, creating an attractive and functional space can significantly boost your property’s appeal to prospective buyers or tenants. Here are five key improvements to make your dental office more marketable:
- Update Equipment and Technology Modern dental equipment is a top priority for today’s buyers. Consider investing in some modern technology in at least one treatment room. Not only will this make your office more attractive to potential buyers, but it will also justify a higher asking price.
- Declutter the Office and Treatment Rooms A clean & organized office demonstrates the care and dedication of the staff and doctor. Remove unnecessary items from countertops, organize paperwork, and ensure treatment rooms and work surfaces are spotless & free of clutter. This not only makes the space look larger and more functional but also demonstrates that the practice portraits a professional image. Buyers are more likely to be drawn to an office that feels well-maintained and ready for immediate use.
- Create a Modern and Inviting Reception Area The reception area is the first impression patients get of the practice. Ensure it is warm and inviting by updating furniture, lighting, and décor. A well-designed reception area with comfortable seating and modern aesthetics signals to the buyer that this practice is well maintained and up-to-date.
- Modernize Your Patient Restroom An often-overlooked space, the patient restroom can significantly impact overall perception. A clean, modern, and accessible restroom with updated fixtures, fresh paint, and good lighting can enhance your office’s appeal. A well-maintained restroom shows attention to detail, cleanliness and care for patient comfort.
- Refresh the Office. Have your floors and carpeting professionally cleaned, paint the office in a neutral color, repair any chipped countertops or cabinetry, change the ceiling tiles and install LED lighting throughout.
- Boost Curb Appeal The exterior of your dental office should be as inviting as the interior. Consider refreshing the exterior with a new coat of paint, updated signage, or landscaping. A clean, attractive façade can make a big difference when drawing in potential buyers or tenants.
By making these updates, you can significantly enhance the value and appeal of your dental property, ensuring it stands out in a competitive real estate market. If you are not sure how to start, contact Sharon Bogetz, Century 21 Commercial Realtor and expert dental realtor for a free consultation.
by admin | Jun 29, 2024 | Commercial Real Estate
Sharon Kantor Bogetz recently completed an intensive 4-day CCIM course focused on Market Analysis in Commercial Real Estate. This comprehensive training focused on key sectors including Retail, Office, Multi-family, and Industrial properties.
Sharon’s commitment to continuous learning sets her apart in the competitive field of commercial real estate. The CCIM course has equipped her with advanced tools and insights, providing her clients with significant advantages in their real estate ventures.
Sharon excels in guiding clients through the due diligence process, ensuring they make informed decisions regarding purchases, investments, and leasing opportunities. Her expertise spans financial analysis, strategic planning, and marketing, as well as psychographic (lifestyle) demographics. These skills enable her to identify and secure optimal commercial opportunities for her clients.
Sharon’s proficiency in market analysis empowers her to deliver unparalleled service. Her clients benefit from her ability to strategically assess the potential of various properties, giving them a competitive edge in the fast-paced markets in Chicagoland and Northwest Indiana.
Pictured here with her instructors and some of her classmates, Sharon exemplifies dedication to professional growth and excellence. Her ongoing commitment to education further cements her reputation as a leading commercial real estate expert.
As Sharon continues to enhance her knowledge and skills, she remains a trusted advisor in navigating the complexities of the commercial real estate market. Her clients can be confident that they are working with a professional who is not only up-to-date with industry trends but also adept at leveraging this knowledge to their advantage.
