Office tenants are now scrutinizing the financial health of office landlords, as the U.S. office market faces turmoil, missed loan payments, and foreclosure warnings. The shift is a reversal from the past when office landlords demanded information on tenants’ financial standing before sealing deals. The queries come as prominent building owners across the U.S. are facing a worsening cash crunch as tens of billions of dollars in debt is due this year. Some tenants are not negotiating with building owners until they are satisfied and understand the properties’ financial situation.
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Frequently asked questions
A full-service lease is a lease that has one, all-inclusive rental rate which includes both the base lease rate and the operating expenses combined into one figure.
A modified gross lease is a lease where the tenant pays base rent at the lease’s inception, but it takes on a proportional share of some of the other costs associated with the property as well, such as property taxes, utilities, insurance, and maintenance.
A triple net lease 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. These expenses are in addition to the cost of rent and utilities.
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