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Commercial Property Management in Fort Collins and Northern Colorado

All real estate property management has many of the same components. Advertising the space, qualifying tenants, moving them in and out. There are the occasional repairs and maintenance that are the owner’s responsibility. Some are the tenant’s responsibility. But there are some real differences – like the form of the lease.

There are basically three types of commercial leases. They are the Gross Lease, Modified Gross Lease, and the Triple Net Lease (and a variety of hybrids in between!)

In a Gross Lease the tenant pays all costs including rent, utilities, taxes, maintenance, and insurance.  That is commonly modified to become a ‘Gross Plus Utilities’ lease, which is the second type.

In a ‘Gross Plus Utilities’, the utilities are commonly paid by the owner who then bills back the tenant. Some owners like this control to be sure the utilities are paid. An unpaid water bill can result in a lien on a property.

The Triple Net Lease commonly is known as a “NNN” lease. In an NNN lease, the components are usually broken down into rent, utilities, common area maintenance, taxes and insurance, which are paid by the owner and billed back to the tenants. This becomes the tenant’s monthly NNN charge.

The difference can be thought of as how many checks the tenant writes. If they write one check each month, that is probably a Gross lease. If they write more, then it is a Modified Gross or an NNN lease. 

In the management of Commercial Real Estate, the manager needs to be familiar with these leases and how to apply them. Many leases have annual rent escalators. It’s amazing how many tenants forget about those!

If the lease is a Modified Gross or an NNN Lease, the costs have to be monitored. Annually, the prior year’s costs (the nets’) are calculated on a per square foot basis. That cost is added to the rent for the coming year, to reimburse the owner, so it is a bookkeeping effort to be sure the NNN costs are calculated correctly, on time, and the tenant charge for the coming year is assigned to them correctly.

At Dimensions Realty and Management, we handle leasing commercial properties for our clients at no additional cost. The only cost that can be incurred is a 3%+- commission paid to the broker representing the tenants, if there is one. The commission is typically based on the amount of the rent for the primary term of the lease, although it varies greatly.

From a Gross Lease to an NNN Lease, we understand the commercial nuances and how to handle them.

Call Ross Milliken at 970-490-1220 to discuss your commercial property management in Fort Collins.