Are you wanting to get into the real estate game but don't know any of the lingo? Parse through this plethora of lessons where you will learn the meaning and specific application of dozens of real estate terms taught by the incredibly successful Michael Burer.
alternative to lynda.com . I'm joined here today with Michael. There is no real estate topic too obscure Burer, and we are talking about a term that if you're not careful it'll get you emotional. It's called gross lease, and I'm going to read the definition and he's going to bring some clarity and an ample example that my mind can handle about what this term actually means. So gross lease. A lease in which all expenses associated with owning and operating the property are paid by the landlord. That doesn't sound gross. That sounds good.
-It is good.
-What is a gross lease? Tell me about it.
-If you're a tenant this is a favorable lease. So the risk of inflation or the cost of operating the building are borne by the landlord rather than the tenant. So if electricity goes up in price, if the taxes increase, if the roof needs to be replaced or repaired-- all of those things that are paid by the landlord. Versus if it was a triple net lease, which is the other extreme example, all of those costs will be borne by a tenant in a triple net lease.
-Do you feel like that it's reasonable for most business owners to go out there and try to get a gross lease? Is that what they should be doing? Should they be trying to get a gross lease?
-It all depends on the market, so it's not something for a landlord or a tenant, probably in most cases, to try to negotiate. You should just know what you're getting yourself into because it really is driven by the market and usually a certain type of lease in that area. So office buildings in this area will all be gross leases.
-How common is a gross lease?
-It depends on the market, again, and the type of building. So in industrial it would be very common. In an office setting a variety of gross leases will more common, but in retail triple net would be more common.
-Why is a gross lease so common here in San Diego?
-It's by sector, so in office it's just more common. It's a standard.
-Across the country?
-In most markets, but there are markets where office buildings are more triple net. In Southern California, gross leases are typical for office buildings.
-Michael, I appreciate you a lot, and a lot of times I try to come up with an elaborate way to express that to you. Some people might have seen those other episodes where I've done some pretty sensational ways to appreciate you. What I want to do is I just want to raise a glass to my appreciation--
-I appreciate that.
- --for you. If you would also cooperate and raise a glass.
-Here's a cheer. Here's to my appreciate of your unique appreciation of my appreciation for you.