Advantages of Triple Net Gateway Lease to Tenants
One of the most popular property types in the commercial real estate is what is known as the triple net or the triple n (3N) that represents 3 net terms given to tenants with high credit ratings. The leased real estate taxes or tax net, insurance, and all properly maintenance, are now in the responsibility of the tenant.
Suffice to say that these triple-net deals appear to be the perfect investment for the property owner since there is no management responsibility that is involved and therefore this is the best place to put their extra money with no headache and better profitability. Since the tenants they would get would be only those who qualify, they are assured of a long-term lease. This then also means having a stable net income and a unique measure to bypass taxes and insurance to shelter their leased real estate investment.
Tenants have a higher risk in this arrangement since the property owner is favored more than the tenant in this arrangement. However, there are various reasons which shows that for some retail and industrial rentals, this is not the case.
Is some ways it also benefits retail and industrial rentals since they can have full control of the property and they can do things like install plumbing systems or repair the roof without getting the approval of the property owner. The tenant has the power to hire anyone when it wants to either install or repair various fixtures that it deems appropriate for their present need. But tenants are limited in that the contractors that they hire should use quality materials and not substandard ones that would compromise the life of the fixture. Making small changes to the property is included in the tenants right which is not under the control of the property owner. But the agreement that was signed prior to occupancy is moderated by the lease.
One of the biggest advantages of a triple net lease is that it usually has lower rents compared to gross rents. Since they have lower rents, they absorb the operational expenses type of retail and industrial rentals.
Before the signing of the contract for this Triple Net Gateway lease, the tenants should have identified the risk factors so that it needs quality risk management and this means that they must be cautious when negotiating caps. What this includes is the maximum amount you are liable for over the basic rent amount each year. You have to remember your liability for the extra expenses and this does not depend on whether your business makes good or not. A proper application of this tripe net lease will actually benefit both the property owners and the tenant as well.