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Gross Leases: Are They the Right Fit for Your Property?

Tag: Property Management

Gross Leases: Are They the Right Fit for Your Property?

February 2, 2024

What is a Gross Lease?

A gross lease is a type of lease that requires the tenant to pay one flat fee to the landlord to rent a given space. 

Rather than the tenant paying additional fees, the owner designs the rental amount to cover all operating expenses. These expenses generally include property taxes, insurance, and utilities, but the tenant could negotiate to have additional services such as cleaning included. 

In commercial real estate, there are several types of leases to choose from, depending on the property you own. Each variety of lease affects how your tenant-landlord relationship functions, so it’s best to consider all your options before making a choice. 

Types of Gross Leases

While all gross leases are similar, they fall into two general categories: modified gross and full service. 

A full service lease, as described above, includes all operating expenses in a flat rental amount. The tenant is not responsible for additional charges outside of their weekly, monthly, or yearly fee. 

Alternatively, a modified gross lease is tailored to the landlord’s needs. In this scenario, the rental amount may include property taxes and insurance but not utilities. A modified gross lease combines a gross lease and a net lease (where the tenant is responsible for operating expenses). 

Pros and Cons

Before deciding on a gross lease, it’s essential to understand the pros and cons. On the upside, a gross lease allows the landlord to collect a higher rental amount and pass along operating expenses to the tenant, especially as costs increase over time.

On the other hand, a gross lease requires more attention from the property owner as they are in charge of ensuring maintenance is taken care of, and bills are paid.

Be sure to partner with a real estate professional to help you decipher which type of lease is best for you and your property. 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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5 Common Mistakes of Commercial Landlords

December 20, 2023

We’ve all heard the horror stories of commercial and residential landlords. From tenants destroying property to simply not paying their rent, it’s easy to be scared away from being a rental property owner. There are, however, some tried and true methods to ensure the success of your investment.

Let’s take a look at a few common mistakes of commercial landlords and how you might be able to steer clear of potential issues.

Common Mistakes of Commercial Landlords

The following are a few of the most common mistakes of commercial landlords:

1. Negotiations

Whether you are purchasing commercial property or working on the details of a lease, understanding the negotiation process is crucial. Landlords and buyers often go into negotiations without proper representation and not having solidified their desired terms. 

2. Property Management

The wrong property manager or poor management systems can be the downfall of a commercial investment. Picking the best property manager for your building is equally as important as choosing the right tenant. 

3. Maintenance

Deferred maintenance leads to more significant expenses down the road. A landlord who notices an issue and immediately addresses it saves time, money, and energy in the long run. 

4. Due Diligence

Due diligence is paramount when buying commercial real estate or considering a prospective tenant. Investigating each aspect of the building and tenant to ensure they are a good fit for you and your portfolio will increase profitability. 

5. Leases

Any ambiguity in a lease can lead to conflict. A correctly drafted lease with black-and-white terms keeps everyone on the same page regarding rules and responsibilities. 

An Agent Ally

A commercial real estate agent ally can make all the difference. Your broker should be well-versed in the above-mentioned issues and will guide you toward success.

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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How to Attract the Best Commercial Tenants

December 6, 2023

The type of tenants you have in your commercial property can dramatically impact your return on investment. 

Hand-holding or excessive wear and tear can quickly reduce cash flow and increase staffing and building expenses. On the other hand, a renter who operates autonomously and goes above and beyond with building care and maintenance may increase the value of your commercial asset. 

Attracting tenants that best fit your space and management style is the key to being a successful landlord.

Attracting and Retaining Great Tenants

Here are a few things to consider in your attempts to attract and retain great tenants:

  • Location: Always at the top of the list when it comes to real estate, an appealing location will attract many tenants, allowing you a larger pool to choose from. 
  • Access: Buildings with easy access and plenty of parking can be hard to come by. Having great accessibility at your commercial property can help secure an exceptional tenant. 
  • Safety: Safety is typically at the top of the wish list of a high-quality tenant. Offering top-notch building security is extremely attractive for prospective renters.  
  • Appearance: Appealing interior and exterior appearance helps your building stand out amongst other options, driving higher cash flow and quality tenants.
  • Amenities: Shared amenities (conference rooms, lounges, kitchens, etc.) are great tools in marketing to a wide variety of renters. 
  • Responsiveness: As a landlord, responsiveness is crucial in attracting and retaining great tenants. Whether scheduling showings or following up on maintenance requests, quick responses are always appreciated.
  • Feedback: Collecting feedback and doing all you can to keep renters satisfied is the best way to keep solid tenants.

Use Your Broker 

Using your broker for property marketing and recommendations on best landlord practices will guarantee high-quality tenants. Experienced commercial real estate agents know where to look to find great tenants and the right questions to ask to ensure a smooth lease going forward. 

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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Perks of Owning a Storage Facility

November 21, 2023

Office buildings and apartment complexes are often top of mind when it comes to commercial real estate. While these options make up two of the largest categories of commercial property, there are many other types of investments.

Storage facilities, although often overlooked, can provide a strong return and cash flow. 

Why Invest in a Storage Facility

Here are a few reasons why you might want to consider investing in a storage facility:

Demand

As the population and economy grow, so do our storage needs. Rising demand for storage space helps boost property values and rental income. 

Turn Time

Compared to other types of rentals (residential, office space, etc.), storage facilities typically have a very short turn time. Smaller self-storage units may take less than a couple of hours to have cleared out and ready for the next renter. 

Operating Expense

Operating expenses are relatively minimal compared to other commercial real estate investments. Lower taxes, fewer management requirements, and minor utility expenses (especially if your storage is not temperature-controlled) keep operating costs down.

Group of Renters

Storage facilities bring value to a broad group of renters. Both businesses and individuals consistently use self-storage for various needs, minimizing vacancies and turnover. 

Number of Units

Self Storage typically involves owning a large number of units. The greater quantity means that a single renter deciding to leave minimally impacts cash flow.

Make a Game Plan 

You should start by mapping out your long-term investment goals and making a game plan to get yourself there. Even if a storage facility is not your first investment, you may consider adding one to your portfolio in the future. 

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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Top Strategies for Marketing Commercial Real Estate

October 13, 2023

Ready to Lease or Sell?

Whether you are getting ready to lease or sell a piece of commercial real estate, having a top-notch market strategy is essential. 

Online platforms mean that buyers and renters have access to massive amounts of real estate information in the palm of their hands. When you are in a position to lease or sell commercial space, you need to be sure your property stands out among the rest. 

Commercial Real Estate Marketing Strategies

The following commercial real estate marketing strategies will help you find the right buyer or tenant in no time.  

  • Know Your Audience: If you don’t know who you want to market to, it will be challenging to get the word out. Knowing your target demographic helps narrow your focus and lets your advertising connect more effectively.
  • Understand the Value Proposition: What do you and your property have to offer? It is vital to know your value proposition and how to present it to potential buyers or tenants. 
  • Showcase the Property: There are various ways to showcase a property, from professional photos and videos to 3D walkthroughs and even virtual reality tours. Determine the best way to showcase your property and get as many eyes on it as possible.
  • Use a Budget: Having a budget and sticking to it will ensure you stay within your means. Marketing is not all about who has the most significant budget but who is consistent and strategic.
  • Be Responsive: With rapidly available content everywhere and consumers looking for instant gratification, quickly responding to inquiries about your commercial space is paramount.

Talking with an experienced commercial real estate agent who is well-versed in the most up-to-date marketing strategies is highly beneficial. 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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#longmontcommercialrealestate #commercialrealestatebroker #northerncoloradocommercialrealestate

Best Practices for Commercial Property Maintenance

September 27, 2023

Managing Commercial Property

Acquiring commercial real estate is one piece of the puzzle; managing a property is another. Whether you hire a property manager or take on the responsibility yourself, it is an essential part of ownership. 

A property manager will help facilitate tenant relationships, negotiate leases, and preserve the building’s condition. Consistent property management maximizes your return on investment by increasing cash flow and boosting appreciation potential. 

Maintenance is Key

While there are many important aspects of property management, maintenance is key. A building that is well-cared for will not only be appealing to tenants looking for a new space to lease but also for future buyers if you end up needing to sell. 

Preventative Maintenance 

When people think of building maintenance, they often imagine a handyman fixing a broken light fixture or a plumber repairing a leaking pipe. Preventative maintenance, however, is even more essential. 

Preventative maintenance may include regularly scheduled plumbing, electrical, and HVAC inspections, checking roofs for leaks, and consistent cleaning to avoid general wear and tear.

Tenant Communication

In addition to preventative maintenance measures, having proper systems in place for tenant communication is critical. When issues arise, you want your tenant to understand what steps to take and how to efficiently communicate the situation to the property manager or owner. 

Quick Repairs

Once an issue is identified, the landlord or property manager should address repairs quickly. Strong relationships with contractors and vendors allow for speedy resolutions at fair prices. 

Overall, following best practices for commercial building maintenance is essential in preserving your real estate investment. 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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What to Consider Before Investing in Office Buildings

September 13, 2023

Investing in Office Buildings

If you are pondering a commercial real estate investment, office buildings are likely on your radar. If you’re already invested in residential real estate and other types of commercial property, office buildings can be a unique way to diversify. They can provide cash flow opportunities, tax benefits, and long-term appreciation. 

When people think of office space, some immediately go to skyscrapers in downtown Denver. Office space, however, can be acquired on a much smaller scale and attract various tenants aside from corporate giants.

If it seems like office space would be a great addition to your portfolio, there are a few things you should consider before you take the leap.

What to Consider

Before investing in an office building, here is what you should consider:

  • Location: As with any piece of real estate, location is critical. Choose a site that will fit your potential renters and their businesses. 
  • Quality: Not all office spaces are created equal. Consider your budget and try to find the building with the highest quality structure, mechanical systems, and finishes. 
  • Size: The amount of property you are willing to manage and the type of tenant you hope to attract will dictate the building size you choose. 
  • Layout: Does the building provide an open concept or a walled office setup? Reconfiguring layouts can take significant time and money, so be sure the space is usable for your potential tenants. 
  • Tenants: The type of tenants you want will significantly impact the building you invest in. Every kind of tenant requires a different location, layout, and amenities. 
  • Leases: Whether there are existing leases or if you will be acquiring all new tenants, it’s essential to consider what types of leases you prefer. 

The Real Estate Cycle

As we all know, real estate is cyclical. Commercial buildings, including office space, are no different. A good investment stands the test of time and is versatile through all cycles. If you are considering investing in commercial office space, consult an experienced commercial real estate broker to be sure you make the right investment. 

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.

Like, Share & Follow us on LinkedIn and Facebook.

#longmontcommercialrealestate #commercialrealestatebroker #northerncoloradocommercialrealestate

The Evolution of Commercial Retail Space

August 3, 2023

Will E-Commerce Be the Downfall of Commercial Retail Space?

Many people wonder if e-commerce giants like Amazon will be the downfall of commercial retail space. The short answer is no; commercial retail space simply must evolve with the new normal. As technology and societal patterns change, retail and real estate will follow suit. 

Buy Online and Pickup In Store

Is a buy-online-pickup-in-store (BOPIS) option the answer? It certainly is one that large retailers are paying attention to. Stores like Target and Walmart have found significant success in offering a BOPIS option. 

Not only does it give consumers the ease of purchasing an item online, but it also provides instant satisfaction in that they can have the product the same day. While Amazon offers some same-day delivery, it is only available for some of their inventory. Therefore, when shoppers can find what they are looking for in a local store and pick it up later that day, they will likely forgo the Amazon order. 

Change Its Purpose

If you own commercial retail estate space, you may need to consider changing its purpose. With such a substantial increase in online shopping, there is a greater demand for storage space to house inventory. Online shoppers want more color, material, and size options meaning retailers must have more products on hand. Physical store locations may succeed in serving as storage locations for increased inventory. 

Additionally, without the ability to see products in person or try on clothing items in-store, e-commerce can lead to more frequent returns. While consumers do love the ability to have packages shipped straight to their door, they don’t enjoy the hassle of repacking and bringing unwanted items to a UPS store to be returned. Brick-and-mortar retail spaces can serve as drop-off locations and even offer drive-through options for customers in a hurry. 

Finally, larger retail spaces and shopping malls could transform altogether into community gathering centers or even multi-family housing. 

Overall, commercial retail space isn’t going anywhere quite yet; it’s simply continuing to shift with our needs and desires. 

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.

Like, Share & Follow us on LinkedIn and Facebook.

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Tips for Subleasing Commercial Real Estate

July 18, 2023

What is Subleasing?

Subleasing is common in both commercial and residential real estate, and involves the current tenant leasing their rented space, or part of it, to a new tenant. 

The new tenant, therefore, is known as the subtenant, and the agreement between the two is known as a sublease. The subtenant pays their rent directly to the original tenant, who then pays the landlord. Subleasing has many advantages, and following the tips below will ensure the process is successful. 

Tips for Subleasing

Here are a few tips to consider prior to subleasing commercial real estate:

  • Work with a knowledgeable commercial real estate agent who has experience in subleasing agreements and can advise you accordingly.
  • Research the area and property extensively before signing. Make sure it will be an excellent fit for your business!
  • Consider having an attorney review the sublease in detail to ensure the agreement is fair. 
  • Don’t be afraid to negotiate the terms of the sublease to better benefit you. 
  • Interview the tenant to make sure they are someone you can trust.
  • Throughout the sublease, communicate frequently with the tenant/landlord about expectations. 

Depending on your situation, subleasing might be the best option for your business. Subleasing can broaden opportunities for office locations and is often more cost-effective. Knowing the ins and outs of being a subtenant and following the tips above will help ensure success in your next subleasing endeavor. 

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.

Like, Share & Follow us on LinkedIn and Facebook.

#longmontcommercialrealestate #commercialrealestatebroker #northerncoloradocommercialrealestate

Pros and Cons of a Triple Net Lease

March 30, 2023

What is a Triple Net Lease?

A triple net lease is one of several lease structures in commercial real estate. In general, net leases require the tenant to pay other expenses in addition to their base rent. There are single, double, and triple net leases, which refer to the number of additional costs the tenant must pay.

A single net lease involves the tenant paying base rent and property taxes. A double net lease is structured so that the tenant pays property taxes and insurance in addition to their rent. Finally, with a triple net lease, the tenant pays the base rent plus property taxes, insurance, and maintenance.

Pros of a Triple Net Lease

There are several pros of a triple net lease. As a landlord, a triple net lease leaves little room for risk. The tenant is paying all of the building’s expenses, so the property owner can be sure they will not incur unexpected costs. 

For a tenant, a triple net lease gives more control. They don’t have to manage the building’s upkeep and appearance. Additionally, the tenant often has control over their utility usage and the associated costs. 

Cons of a Triple Net Lease

There are a handful of cons to keep in mind when considering a triple net lease as a landlord or tenant. For landlords, finding a solid tenant willing to take on a triple net lease can be challenging and, therefore, may result in vacancies. In addition, the tenant is given lots of automomy, and the landlord must trust that they have the financial ability to maintain their leases space properly. 

As a tenant, the biggest con is the risk. With complete control of the building comes elevated risk exposure. If the building starts experiencing maintenance problems, the cost falls on the tenant. Additionally, property taxes and insurance increases will directly impact the tenant’s overhead. 

Figuring out the right lease structure for your property or business can be difficult. 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.

Like, Share & Follow us on LinkedIn and Facebook.

#longmontcommercialrealestate #commercialrealestatebroker #northerncoloradocommercialrealestate

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