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.

5 Reasons to lease or purchase a commercial property in Atlanta

The majority of business types that are leasing property in Metro Atlanta are retail spaces. Atlanta is a hot market, and most investors know that it’s getting a lot of attention. Commercial investors from outside Atlanta and even from outside of the U.S. have noticed that it’s a great place to invest.So here are the top 5 reasons to lease or purchase a commercial property in Atlanta#1 Economic GrowthAtlanta is growing and also sustaining that growth incredibly. Every year, the city gets bigger, better, and more appealing to everyone worldwide. Atlanta has lots of opportunities and that's appealing to many. Atlanta has lots of movers and shakers and there is always something happening, and the growth has been consistent at levels that are almost unheard of. With this going on for a few years now, it shows no signs of letting up, making Atlanta’s growth reliable. And the best place for investors to purchase or lease commercial space.#2 Geography and large landscapeReason #2 to invest in Atlanta is its landscape. The ground that we have covers a large area and many diverse and unique neighborhoods. There’s a lot of beautiful green space and you can choose to live near trees and nature or downtown in the middle of a lot of action. We have high rises and the city beltline. We have suburbs and neighborhoods that are both new and established and minutes from the city or far away, whichever you prefer.In Atlanta, investors can find commercial space within walking distance of your home, great shopping, restaurants, and nightlife. These things alone should draw you to Atlanta.#3 Inbound Infux of InternationalThe economy isn’t the only thing growing in Atlanta – the population is also surging. Plenty of people are moving to Atlanta, and this inbound influx is always a great indicator when you’re investing. When you’re choosing a market, you want to see outward people moving into a city and not just organic within the city.Atlanta attracts new residents from all over the world. A lot of that population growth comes from the education system in Atlanta. Some of the best universities are in the city, and they offer great degree programs as well as post-graduate opportunities. The technology is also pretty impressive.#4 Positive Rent Vs purchase priceA lot of investment property in Atlanta can be purchased at an affordable price. There’s also tremendous potential for value. Five years ago, we didn’t have a lot of owners who were willing to do upgrades and updates to add value to their rental property. That’s different, now. In the last few years, rehabs have been happening consistently, and they’ve been pretty exciting.Investors are moving forward. They’re buying properties for pennies, adding a little money to the investments, and earning a lot more in rent. This is a trend that’s happening throughout the Atlanta market.Atlanta is definitely a market to consider if you’re an investor looking to buy the property and earn some great returns. A lot of the investors buying in Atlanta don’t live here.

What is the average price of space per sq ft for lease

According to commercialcafe.com the average price per square foot in Metro Atlanta for office space is 2020 Office Space Rent & Sales $30.672020 Avg. Asking Rent 4.37%Y-o-Y Avg. Asking Rent Change 17.16%2020 Office Vacancy Rate $508.1M2020 Total Office Sales $209.65Avg. Sale Price/Sqft Atlanta office price per square foot in 2020 was $30.67 on average. This marked a +4.37% change in office space price per square foot compared to the previous year. The local office market recorded an average vacancy rate of 17.16% across all asset classes combined. The 21 transactions that closed here throughout 2020 amounted to a total sale volume of $508.1M. Atlanta office space commanded an average sale price per square foot of $209.65. Average Rent by Office Class 2020 Average Office Rent per Square Foot Atlanta Class A Office Space$32.32 Atlanta Class B Office Space$23.56 Atlanta Class C Office Space$17.84 Georgia Class A Office Space$30.31 Georgia Class B Office Space$21.23 Georgia Class C Office Space$16.05 Atlanta, GA Office Asking Rents by Class Average office rent in Atlanta rested at $30.67 per square foot in 2020. As would be expected, office rent price showed some variation from one asset class to another. As such, the asking rent for class A office space in Atlanta averaged $32.32 per square foot. Across all submarkets, class B office space recorded an average asking rent of $23.56 per square foot. Meanwhile, assets encompassing class C office space saw asking rents of $17.84 per square foot, on average. Comparably, statewide Georgia average office rents by class in 2020 were: $30.31 per square foot for class A office space; $21.23 per square foot for class B office space; $16.05 per square foot for class C office space. 2020 Office Vacancy Rates in Atlanta Submarket Asking Rents Vacancy Rates Midtown $36.67 16.90% Buckhead $36.03 19.25% West Atlanta $35.59 19.47% Central Perimeter $30.84 16.90% Brookhaven $28.16 8.99% Galleria $28.14 15.83% Central Business District $25.17 19.79% Northlake\Chamblee $20.69 23.95% South Atlanta $20.31 21.80% Data provided by Commercial EdgeSubmarket differences in factors such as property mix, degree of accessibility, and availability of amenities influence not only variation in office rent price, but also in vacancy rates. The overall office vacancy rate on the Atlanta market was 17.16% in 2020. Looking at the market stats on a more granular level, data shows that the lowest office vacancy rate in Atlanta was 8.99% in the Brookhaven submarket, while the highest office vacancy in the market was 23.95%, recorded in Northlake\Chamblee. Office Spaces for Rent in Georgia Alpharetta Office Space Alpharetta City Office Space Augusta Office Space Sandy Springs Office Space Marietta Office Space Duluth Office Space Peachtree Corners Office Space Roswell Office Space Macon Office Space Savannah Office Space Atlanta Office Sale Price per Sqft $209.652020 Avg. Price per Sqft 1.39%Y-o-Y Avg. PpSF Change $508.1M2020 Office Sales Volume 212020 Number of Transactions Atlanta, GA Sale Price per Sqft Trend Atlanta Avg. Sale Price per Sqft in 2020$209.65 Georgia Avg. Sale Price per Sqft in 2020$165.65 Atlanta office space cost in 2020 marked a +1.39% change compared to the previous year. The sale price for office space in Atlanta averaged $209.65 per square foot in 2020, across all market subdivisions and asset classes. Conversely, the statewide Georgia average office sale price during the same time period was $165.65 per square foot. 2020 Office Sales Volume Atlanta, GA Total Office Sales Volume in 2020$508.1M Atlanta, GA Total Number of Office Sales Closed in 202021 A total of 21 deals closed on the Atlanta office market in 2020, adding up to a yearly sales volume of $508.1M. Notably, the largest transaction on the market saw 30 Allen Plaza change hands for $89,940,000 on 11/17/2020. Largest Atlanta Office Sales in 2020 Property name Address Date Price 30 Allen Plaza 30 Ivan Allen Jr. Blvd NW 11/17/2020 $89,940,000 55 Allen Plaza 55 Ivan Allen Jr. Blvd NW 3/19/2020 $79,000,000 Stockyards 944 Brady Avenue NW 1/17/2020 $69,700,000 Technology Enterprise Park 387 Technology Circle NW 12/30/2020 $60,000,000 244 Perimeter Center Pkwy 244 Perimeter Center Pkwy 2/11/2020 $41,700,000 Data provided by Commercial Edge 2020 Office Construction in Atlanta, GA Atlanta, GA Total Sqft completed in 20201,727,776 Atlanta, GA Total Sqft under construction in 20216,084,689 During 2020, 1,727,776 square feet of new office space were delivered across the market. At the close of 2020, the Atlanta office inventory included 16 buildings equal to or larger than 25,000 square feet, which comprised 1,727,776 square feet of office space. Looking forward, development activity throughout 2021 is estimated to add 6,084,689 square feet of office space to the market, before year-end. Largest Office Properties Recently Completed in Atlanta Office building Address Sqft Completed Midtown Union 1331 Spring Street, 30309 644,046 2022 One Phipps Plaza 3550 Peachtree Road, 30326 365,263 2022 14th+Spring 1150 Spring Street, 30309 317,500 2022 760 Ralph McGill 760 Ralph McGill Blvd NE, 30312 300,000 2022 Echo Street West NEC Griffin Street NW & Donald Lee Hollowell Pkwy NW, 30318 300,000 2022 The Grady Center For Advanced Surgical Services 90 Jesse Hill Jr Drive SE, 30303 275,000 2022 Altmore 5775 Peachtree Dunwoody Road, 30342 229,074 2022 Northlake Mall - Redevelopment - Offices 2201 Henderson Mill Road, 30345 224,000 2022 Campanile Building - Expansion 1155 Peachtree Street NE, 30309 150,000 2022 Lee + White - Building 929 929 Lee Street, 30310 90,000 2022  

Commercial Real Estate Trend Predictions for Metro Atlanta in 2022

Treading in new territory charting the real estate horizon, Jeffrey Pollock, shares his views on Atlanta’s commercial retail, hospitality, office space, positioning into future trends. In the midst of head-scratching over the post-pandemic recovery arc, will traditional office space companies stagger shifts, change cubicle arrangements, shift into a virtual culture? What will be the cost of mentoring and innovation traded for face-to-face office interaction? Pollock preaches flexibility.After growing up in Raleigh, he graduated from the Kelley Business School at Indiana University. He is now the owner and managing principal of the eponymous Pollock Commercial Real Estate Services, which he founded in 2009.“We are known for in-town expertise; however, we service a wide variety of clients throughout Atlanta. We represent entrepreneurs seeking to purchase or lease new space, landlords, and sellers looking to sell and lease their properties. We’ve assisted a range of diverse companies from high-growth tech firms to an ice cream factory.”Pollock just completed his term as the president of the Atlanta Commercial Board of REALTORS, believed the largest trade association of its kind in the nation. He described his experience there. “When I entered the real estate business, I was eager to get involved for the networking and continuing education opportunities. Over time, I chaired committees, taught courses, and I started serving in leadership on the board of directors 10 years ago. I was nominated by my peers in 2018 to lead the organization as president in 2020.”Pollock shares his views with the AJT.AJT: Assessing the effects of COVID on our real estate market, how would you write this history?Pollock: It is challenging to generalize about the commercial real estate market because the various sectors were impacted by the pandemic quite differently. Warehouse and distribution properties are thriving while hotels and many retail properties are struggling. Our primary focus is on office space, and other than a handful of large transactions, the Atlanta market was generally stagnant. We have observed record-setting amounts of new space being offered for sublease, and there are several new office towers under construction that are only partially pre-leased.AJT: What do you think the first half of 2021 will look like?Pollock: We are anticipating a slow but steady return to the office as vaccines are distributed and the case numbers decrease. Larger tenants are retrofitting spaces and creating staggered schedules for employees’ returns. We expect to see investment sales return and an increase in new deal volume by this summer.AJT: How does that compare to a post-COVID market?Pollock: I remain bullish on Atlanta, and we predict transaction volume will continue to increase. It may be 2022, however, until we can return to pre-pandemic market dynamics.AJT: Will corporations change their business model permanently to virtual office space?Pollock: Every company is evaluating its real estate needs from a safety and productivity perspective. We will see a small percentage of companies that will move permanently to a virtual model, however, the majority of our clients have expressed a desire to retain an office even if not all of the employees are present simultaneously. We are hearing about challenges in recruiting, training, maintaining vibrant culture, and productivity in the all-virtual scenarios.AJT: What about the retail landscape?Pollock: The pandemic has certainly intensified online shopping behavior, and health concerns and regulations surrounding dining have a chokehold on restaurateurs. That said, well-located retail will always adapt to accommodate the needs of the community it serves. In the short term, takeout, drive-through, outdoor dining, and delivery services will prevail, but as soon as it’s safe, many customers will be eager to return to the rich culinary scene we have here. Big box vacancies are finding success with healthcare conversions, and there is a lot of energy around the last mile (rapid order fulfillment) distribution so we will see the ‘order online and pick up in store’ continue to increase.AJT: Any deals to be grabbed for speculators?Pollock: Many qualified investors have capital ready to deploy for distressed assets, but we have not yet seen a freefall in value across most property types. In the short term, the hospitality sector is taking the hardest hit.Pollock and wife Libby have two children and are active at Temple Emanu-El. Pollock is involved in the Jewish Federation of Greater Atlanta, participating in the leadership development program and serving on the Allocations Committee.