Modified Gross - Types of Commercial Leases - Part 5
Last Updated Sept. 7, 2020
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In Commercial Real Estate, a Modified Industrial Lease involves modifications to the Industrial Gross Lease. The modifications can vary, but the tenant often pays for certain items contributing to a Multi-Tenant building’s Common Area Maintenance.
Leasing Overview Information
For an overview of this and other common Commercial Real Estate Lease types, go here.
For a more comprehensive guide written by a commercial real estate broker covering entering into a commercial lease agreement, go here.
A commercial lease is, at least in general, a detailed specification of what property you will gain access to as a tenant, along with the responsibilities of tenant and landlord in terms of the elements of the property and the expenses involved. There are many different types of leases. Each should be analyzed carefully to see that they meet your expectations. Divvying up who will pay for what costs - now and throughout the life of the lease - is a major aspect of any lease. Some (many if not most, I hope) of these costs categories are summarized in the table below:
Expense Category | Responsibility |
| Base Rent | |
| Insurance | |
| Taxes | |
Property Improvements | |
Property Repairs | |
Common Area Maintenance (CAM) | |
| * Landscaping | |
| * Mowing | |
| * Maintenance | |
| * Janitorial | |
| * Security | |
| * Supplies | |
| * Food Service | |
| * Vending | |
| * Etc. | |
| Utilities | |
| * Water | |
| * Electricity | |
| * Sewer | |
| * HVAC | |
| * Sanitation | |
| * Telecomm | |
| * Networking | |
| * Etc. |
A big part of a lease is outlining how these and other expenses are divided between landlord and tenant and how these expenses can vary over time for the tenant - which can, and probably should be limited by caps applied in the lease.
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