Does Commercial Real Estate Have Its Own Language?
Depending on your level of experience, commercial real estate may seem like it has its own language. There is no shortage of acronyms and unique vocabulary. Educating yourself on standard terms in commercial real estate is crucial to excelling as an investor or real estate professional.
More specifically, when looking at a commercial real estate lease, you need to understand the terms used. A commercial lease can have severe financial and legal implications if you don’t correctly understand its terms.
Common Commercial Lease Terms to Know
Let’s take a look at a few common commercial lease terms to know:
- Lease Term: This is simply the lease length from start to finish. After the lease term, there may be specific rules about renewing your lease.
- Purchase Option: Depending on the verbiage, a purchase option can require or allow you to purchase the commercial real estate space at the end of the lease.
- Subletting: This determines whether or not you can rent out a small portion of your rented space to another tenant.
- Go Dark Provision: A go dark provision allows the tenant to stop operating their business when they are no longer making a profit without defaulting on the lease terms. These are common in retail centers.
- Landlord’s Solvency: This aspect of a lease details the tenant’s rights if the landlord goes into foreclosure.
- Zoning: The building’s zoning determines what type of business may operate in that location.
- Escalation Clause: An escalation clause increases rent over a given period. The increases may be due to higher maintenance costs or stronger sales/business activity.
Understanding commercial lease terms and partnering with a professional to help you through the leasing process is critical. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.
We give out $250 gift cards for referrals that become our real estate clients.
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