Why Commercial Real Estate Trumps Residential: A Beginner's Guide to Investing

Introduction: Welcome to our commercial real estate blog! If you're a first-time investor weighing your options between commercial and residential properties, you're in the right place. Here, we break down why commercial real estate (CRE) offers unique advantages and why it might be the better choice for your investment portfolio. Body: Higher Income Potential: Unlike residential properties, which typically generate fixed rental income, commercial real estate can yield higher returns. Commercial leases often involve longer lease terms and tenants responsible for maintenance costs, offering more stability and potentially higher rental rates. Diverse Investment Options: Commercial real estate encompasses various sectors—office buildings, retail spaces, industrial warehouses, and more. This diversity allows investors to tailor their portfolios based on economic trends and market demands, spreading risk more effectively than residential investments. Longer Lease Terms and Stability: Commercial leases are usually longer than residential leases, providing stability and predictable cash flow. Additionally, commercial tenants often bear more responsibility for property maintenance and repairs, reducing landlord expenses. Potential for Appreciation and Value Enhancement: Commercial properties can appreciate in value through strategic renovations, tenant improvements, and market-driven factors. The ability to increase value through improvements and effective management strategies enhances the overall investment potential. Professional Relationships and Networking: Engaging in commercial real estate introduces investors to a network of professionals—property managers, brokers, and developers—who offer valuable insights and opportunities for growth. Building these relationships can further enhance investment success. Conclusion: Investing in commercial real estate offers unique advantages that residential properties may not match. From higher income potential and diversification to long-term stability and value appreciation, commercial investments provide robust opportunities for savvy investors. Whether you're considering office spaces, retail storefronts, or industrial warehouses, exploring the commercial real estate market could be the key to achieving your financial goals. Ready to take the next step? Explore our resources and connect with our experts to begin your journey into commercial real estate investment today! Schedule a call today with our team to start your journey today!

Prime Business Location: 3388 Dogwood Dr, A Strategic Opportunity in Atlanta’s Booming Commercial Scene

Are you a business owner searching for the perfect spot to plant your roots and grow? Look no further than 3388 Dogwood Dr, Atlanta, GA 30354-1447. Priced at a competitive $299,000, this versatile office/retail space offers an exceptional opportunity for enterprises looking to thrive in one of the most strategic locations in the city. With the bustling atmosphere of downtown Hapeville and proximity to Hartsfield-Jackson Atlanta International Airport, this commercial property ticks all the right boxes for business success. Prime Location for Maximum Visibility Strategically situated on Dogwood Dr, one of the busiest streets in the area, this property enjoys unparalleled visibility. Your business will not only attract the local crowd but also transient clientele, thanks to the high traffic and accessibility of the location. The footfall alone will allow your business to reach new heights, capturing a diverse and growing customer base. Versatile Space for Diverse Businesses Boasting 1400 sq ft of flexible floor space, 3388 Dogwood Dr can accommodate a range of business types. Whether you are looking to set up a boutique retail shop, a professional office, or a service-based enterprise, this property provides the perfect canvas. The open floor plan ensures that you can tailor the space to meet your specific business needs. Unparalleled Accessibility Convenience is key when it comes to selecting the perfect location for your business. Situated just minutes from major transportation hubs, including Hartsfield-Jackson Atlanta International Airport and key highways, this property ensures ease of access for both customers and employees. This prime location will greatly enhance the overall customer experience, encouraging repeat visits and long-term client relationships. Thriving Surroundings and Supportive Community Another major advantage of this listing is its proximity to a vibrant local community. The area surrounding Dogwood Dr is a hotbed of activity with a variety of shops, restaurants, and essential services. This commercial space will benefit immensely from the thriving business environment, creating excellent networking opportunities and fostering a supportive community ambiance. Endless Potential in a Rapidly Growing Area The local area is experiencing dynamic growth, making it a fertile ground for new businesses. Hapeville’s development trajectory ensures that by positioning your business here, you are setting it up for future success. Increased local investment and burgeoning economic activities make this the perfect time to secure your spot in this highly sought-after location. Conclusion 3388 Dogwood Dr represents a golden opportunity in today’s competitive commercial real estate market. With its prime location, versatile space, excellent accessibility, modern amenities, vibrant surroundings, and immense growth potential, this listing offers everything a business needs to flourish. Don’t miss the chance to establish your enterprise in one of Hapeville’s most coveted commercial spaces. Contact us today to schedule a viewing and see first-hand how this property can be the cornerstone of your business success. Craft your business story at 3388 Dogwood Dr, where opportunity meets promise!

How Does Commercial Lease Pricing Work?

You’ve finally found the perfect space for your business. Before you sign a lease remember that the lease is not likely to be in your favor if the landlord drafted it. Here are some important points to think about before signing a commercial lease. How is the monthly lease payment calculated? The most basic equation for calculating lease payment takes the number of square feet times the cost per square foot, then amortizes that over 12-months. For example, if you have 1,000 square feet and the cost per square foot is $12, the annual lease amount would be $12,000. Divided by 12 months the monthly lease payment would be $1,000. Again, this is a simplified scenario. These days most commercial leases include additional factors that affect the final price, such as a monthly percentage of your gross sales, property tax, and rent increases, operating expense escalations, common area charges, etc. Can the monthly payment go up at any time? It’s typical that a lease contains what’s known as an “escalation clause” that allows the landlord to pass on increased building operating expenses to the tenants. If your lease contains such a clause you should ask for a cap on the amount the lease payment may rise over a given period of time and an accounting of the items that are forcing the increase. Will my rent increase every year? One very important factor to know is if and when, and by how much your rent might go up over the term of the lease. It is expected that rents will increase as property values increase, so most leases include a rent increase on the anniversary date of the lease.Plus, if your landlord can rent the space for more than you agreed to pay a year ago, he is within his rights to ask for the increase. However, it would be a nightmare if your rent suddenly doubled. You should negotiate the timelines and amounts of increases before you sign the lease. If your landlord balks at this find another space. Is a personal guarantee required? What happens if your business goes south and you can no longer afford to make the lease payment? Are you responsible for paying the rent out of your own pocket? Probably so. Most landlords insist on a personal guarantee from the owner or an officer of the corporation. This means that even if you go out of business you are still on the hook for the remainder of the monies owed. Finally, be clear on every point in the lease. And if you’re not clear on every point get clarification from your attorney. Exactly how much space are you leasing? What day of the month is the rent due and what’s the extra fee if you’re late? Who is responsible for repairs? What common areas will you have access to? Who is responsible for maintaining things like keeping the shared restrooms stocked with soap, towels, and most importantly, toilet paper?

What is the typical lease type in metro atlanta area

At first glance, projecting the cost of renting space in a commercial building may seem pretty straightforward. Once you and your team decide on a commercial space to lease, you negotiate the cost and terms, sign the lease agreement, and move into the space.In reality, fully understanding a commercial lease requires attention to detail and help from a tenant broker. Who will be responsible for paying property taxes and insurance — you or the landlord? Who will pay for utilities? Who will cover maintenance expenses? To discover the answers to those important questions, you need to know exactly what kind of commercial lease you are signing.A landlord can use one of several different commercial real estate lease types when renting out office space. Understanding the differences between each type of business lease will make you smarter during negotiations and help your company better budget monthly expenses.Let’s review the different types of commercial real estate leases so you’ll know what to expect as far as cost and how to negotiate an agreement. Typical outlines for each lease type are listed below, but it’s crucial to note that while each lease category will provide a sense of the tenant’s expected expenses, it is only a sense—there are no absolute rules. Every lease is negotiable, so a thorough review of the lease with your tenant broker and attorney is the only way to know for certain which expenses fall under your purview. Full-Service Lease/Gross Lease Signing a full-service lease (also called a gross lease) means you are responsible for paying the base rent. Generally, the landlord handles the additional building expenses, including maintenance fees, insurance, and real estate taxes. Typically, this results in relatively high rental rates — but as a tenant, you only receive one bill that covers all necessary office expenses. This makes it easier for tenants who want to avoid getting involved in the day-to-day of running an office.However, with some full-service gross leases, some tenants are still required to pay their proportionate share of operating expenses above their base year. This limits how much a landlord is required to pay for tenant expenses past a certain amount. Regardless, make sure to carefully and thoroughly examine your gross lease so you understand whether any conditions, such as additional expenses, are present in the agreement.In summary: What is a full-service (or gross) lease? Tenants pay: Base rent and utilities. Landlord pays: All building expenses, including maintenance costs, insurance, and real estate taxes. What to know: You can incur additional expenses beyond your base rent after the first year of your tenancy. Typical usage: Any commercial space. Most commonly, in properties occupied by multiple tenants, like office buildings. Net Lease A net lease refers to a category of commercial real estate leases. Net leases usually stipulate that tenants pay a proportionate share of the building’s operating expenses: common area maintenance (referred to as CAM) fees, property taxes, and insurance. Types of net leases include triple, double, and single. Each type of net lease has its own level of financial obligation that the landlord passes onto the tenant.In commercial real estate, landlords typically calculate each tenant’s pro-rata share of operating expenses like this: They take the total operating cost per square foot for all rentable space in the building. They then divide that sum among tenants based on the percentage of the building occupied by each tenant.In summary: What is a net lease? Tenants pay: Rent and utilities plus a proportionate share of the building’s operating expenses—property taxes, insurance, and maintenance. Landlord pays: The other part of the expenses (if applicable). What to know: The specific percentage will be stipulated in the lease. Typical usage: Any commercial space. Let’s dive into the specific types of net leases that you’ll see when renting commercial space.  Triple Net Lease/“NNN” Lease A triple net lease is essentially the opposite of a gross lease. The tenant (you) agrees to pay for not only the fees for rent and utilities but also all of the commercial property’s operating expenses, such as maintenance fees, building insurance, and property taxes. Usually, triple net leases come with reduced rental prices because the tenant has assumed responsibility for the operating expenses. NNN leases are often longer-term and have concessions for rent hikes written into the lease.For some tenants, maintenance fees are higher than expected, leading them to try to renegotiate or break their leases. Pre-emptive landlords will use a “bondable” net lease, which cannot be ended before it expires, nor can the rental costs be updated.In summary: What is a NNN lease? Tenants pay: Rent and utilities and their pro-rata share of all of the building’s operating expenses, including maintenance fees, building insurance, and property taxes. Landlord pays: Base building maintenance and repairs. What to know: This is essentially the opposite of a gross lease. Also, sometimes “absolute lease” and “triple net lease” are used interchangeably. But they are not the same. Typical usage: Any commercial space. This is a very common commercial real estate lease type!   Double Net Lease/“NN” Lease A double net lease requires the tenant to pay for the rent and utilities, as well as the property taxes and building insurance. However, the landlord pays directly for the building’s structural maintenance expenses. Like other net leases, base rent is generally lower since the tenant is responsible for additional expenses.Landlords renting an office building to multiple tenants will likely divide the property tax and building insurance expenses fairly among the tenants.In summary: What is a double net lease? Tenants pay: Rent and utilities plus property taxes and building insurance premiums. Landlord pays: Maintenance costs. What to know: They’re especially popular commercial lease types. Also called a “net net” lease. Typical usage: Any commercial space.   Single Net Lease/“N” Lease A single net lease stipulates that tenants pay for rent and utilities as well as property taxes. The landlord takes care of building insurance and maintenance expenses. Be careful not to confuse a single net lease with a net lease. A net lease refers to a category of leases including single, double, and triple.In summary: What is a single net lease? Tenants pay: Rent, utilities, and property taxes. Landlord pays: Building insurance and maintenance. What to know: This isn’t the same thing as a net lease, which refers to a category of lease types. Typical usage: Any commercial space. Modified Gross Lease A modified gross lease occupies the middle ground between a gross lease and a triple net lease. In general, a modified gross lease means that the tenant pays base rent, utilities, and a portion of operating costs.The details vary from contract to contract. In some modified gross leases, tenants pay only base rent and utilities for the first year but in each additional year pay a pro-rata share of the building’s operating costs. Their share of expenses would likely be based on the percentage of the building that they occupy. For example, a tenant occupying 50% of a building would be responsible for 50% of its operating costs.In summary: What is a modified gross lease? Tenants pay: Base rent, plus a portion of operating costs. Landlord pays: The other portion of operating costs. What to know: Modified gross lease agreements, and the division of obligations within, can vary widely from lease to lease. Typical usage: Any commercial space. This is a highly common lease type. Absolute NNN Lease Sometimes people incorrectly use the terms “absolute NNN lease” and “triple net lease” interchangeably. They are not, however, the same. Usually, triple net leases require tenants to pay for some or all building repair expenses (such as structural repairs or repairs to the roof), but in some cases, the landlord will assist with those expenses.Conversely, an absolute NNN lease absolves the landlord from all responsibility for the building’s expenses in every case. That means the tenant must cover all building expenses, including any maintenance or repairs to the building’s roof and structure. Essentially, the tenant owns the building without having to purchase it. This lease usually applies only to tenants with national or regional footprints and excellent credit and is long-term. The base rent for an absolute NNN lease is typically much lower than other types of leases.In summary: What is an absolute NNN lease? Tenants pay: All building expenses, including any maintenance or repairs to the building’s roof and structure. Landlord pays: Nothing. They have no responsibility for building costs. What to know: This lease usually applies only to tenants with national or regional footprints—and excellent credit. Typical usage: Long-term leases to credit tenants. These leases are quite rare. Percentage Lease Percentage leases require tenants to pay a base rent in addition to a percentage of gross business sales (once sales pass a threshold). Landlords often ask for seven percent. Be wary if one asks for 10 or 12 percent. Retail mall outlets typically have these types of commercial real estate leases.One upside of percentage leases is that they typically offer lower base rents than standard leases since the tenant is agreeing to pay a portion of sales.In summary: What is a percentage lease? Tenants pay: Base rent plus a specified percentage of revenue. Landlord pays: Typically, some or all of the property taxes, insurance, and maintenance fees. What to know: Tenants agree to pay the landlord a percentage of gross sales, which is usually around 7 percent. Typical usage: Retail space. Negotiation Tips and Exceptions These commercial real estate lease categories don’t represent absolute rules, though they can give you a general idea of what costs and clauses to expect for each one. Remember this: every contract is different, and every contract is negotiable. Read the fine print and review it with your commercial real estate advisor and your attorney before signing.