how a lease rate works
the meaning of lease rate depends on the context in which it is being used namely what type of property is being leased in commercial real estate the lease rate is the cost to occupy the space commonly stated as a dollar amount per square foot of space per year the lease rate can also be stated in terms of dollars per month as with a rental agreement or even dollars per year the terms of the lease will spell out the time period that the lease rate applies for it may also spell out incremental increases in the lease rate over multi year leases to get a true idea of the cost of renting a space in addition to the lease rate the potential tenant will need to know if the lease is single double or triple net a single net lease is a commercial real estate lease agreement in which the tenant agrees to pay property taxes in addition to rent a double net lease is a rental agreement whereby the tenant agrees to cover the costs of two of the three primary property expenses taxes utilities or insurance premiums also known as a net net nn lease these are most commonly found among commercial tenants finally a triple net lease triple net or nnn is a lease agreement on a property whereby the tenant or lessee promises to pay all the expenses of the property including real estate taxes building insurance and maintenance because most commercial lease rates are set out in dollars per square foot it makes it easier for the potential lessee tenant to compare the leasing costs of properties with different size profiles special considerationsthe question of when to lease equipment or space rather than building or buying is one that businesses struggle with generally speaking the key factor is how long the leased property is expected to be in use for shorter term surges in equipment demand or operational expansion pushed by temporary market conditions leasing is an excellent solution that minimizes sunk costs if the increased demand is expected to be long term then the up front costs of ownership usually dwindle in comparison with the savings over time and the potential for appreciation in a commercial property that said some companies prefer to lease over the long term anyway as it relieves the company from having to worry about non core business issues like equipment and building maintenance types of lease rates