Industrial Space Leases

Most people imagine that leasing an industrial space is similar to an apartment lease. A commercial or industrial space is one that is used for production, manufacturing, storage and distribution point of goods by companies. There is a wide array of differences between the two. The primary difference is the intended purpose of the space leased.

Leasing commercial spaces is complex. You will be required to sign an agreement form for any industrial spaces for lease. The owner of the space works with you to come up with favorable terms that allow you to conduct business in that commercial space. The agreement form is a standard requirement for the process to be legal. Learn more about this concept with us below.

Common Terms Used In Industrial Space Leasing:

  1. Letter of intent

It is the primary foundation of the lease negotiations. The tenant or landlord via a broker often will outline their terms for the leasing contract. It will then be followed with negotiations to get a reasonable for both parties to enter into an agreement.

  1. Lessor

It refers commonly to the landlord or any person who hold the title and conveys the rights to occupy and use the property listed under the lease agreement.

  1. Lessee

It commonly refers to the tenant who has the right to occupy and use the property as stated in the lease agreement.

  1. Load factor

A method of lease rent calculation that combines the base amount plus the usable square feet. Each tenant has a percentage of the commonly shared square feet that they should pay.

  1. Base rent

Industrial spaces for rent require a minimum fee due often monthly as per the signed agreement. For example, an owner of a shop in a mall will pay a standard fee every month of $1600.

  1. Percentage lease

It is considered an additional fee to the base rent. For example, the shop owner will pay a base of $1600 plus 5% of every sale they make.

  1. Operating expenses

These are additional costs that facilitate the running of your business within the leased space such as lighting, security, air conditioning, water and cleaning services.

  1. Gross Lease

The tenant pays a gross rent from which the lessor or landlord pays the operating expenses. In such cases, the tenant cannot control the operating expenses.

  1. Net lease

The tenant pays the net rent. This means that he or she will pay an additional for all the operating expenses incurred.


Payment Terms

There are different types of industrial leases available to customers based on the payment terms or flexibility. Some of the primary ones such as percentage, gross and net lease have been discussed above. Here are a few more:

  • Double net lease (NN lease)

The tenant caters for the base rent, frequent utilities and a share of property insurance and taxes. On the other hand, the landlord caters for the maintenance and repairs. It is landlord friendly.

  • Triple net lease (NNN lease)

This approach favors the landlord’s interest. The tenant will pay the base rent plus utilities, maintenance, repairs and a pro-rata share of the tax and insurance expenses.


It is important to note that the lease agreement is signed by both parties once they have a common ground or terms.

If you are interested in renting or leasing any industrial or commercial properties, check out available warehouse and industrial spaces for rent by Schwarz Properties.