Lease Rates – What’s Important to You?

In my previous blog post I mentioned that understanding the two most common lease rate structures – NNN vs Full Service – are important to understand.  Please consider the following: 

Triple Net (NNN) –  Consider NNN lease rate structures like you would a home mortgage.  By that I mean you may have a mortgage payment every month but that isn’t the only cost you pay to maintain your home is it?  There are property taxes, insurance costs, utility costs, maintenance costs etc.  The real cost of your home is certainly  more than just the mortgage payment — so are Triple Net (NNN) lease rates.  To make a fair comparison between Full Service rates vs NNN rates, add the “extra” costs to the NNN lease rate.  These additional NNN cost for the Northwest Valley range anywhere from $6.00 – $9.00 per square foot, so for purposes of example: 

Triple Net (NNN) lease rate of $15.00 per square foot on 1,000 square feet = $1,250.00/month 

ADD additional net costs – utilities, CAM (maintenance), taxes, insurance etc of at least $6.00 square foot = $500.00/month 

TOTAL ESTIMATED NNN LEASE PAYMENT = $1,750.00/month (conservatively) 

ACTUAL COST PER SQUARE FOOT = $21.00 

Given that Full Service Lease Rates include all of your costs in one payment/cost per square foot,  A $19.00 or $20.00 per square foot Full Service Lease Rate is economically a better a deal for your business.

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