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Commercial Lease Terms Are Changing

Posted By Paul Xumsai on November 05, 2020 in Commercial

The retail sector is reeling with uncertainty as the global pandemic has turned the world upside-down. Brick-and-mortar shopping malls and retail space’s ability to survive depends a number of key factors such as: rent price, cash flow, demand, expense, vacant rate, and more. Shops had been dealing with rising rent costs and steady increases in the price of doing business.

This combination of factors has made it more difficult for retail and restaurant establishments to make a profit, forcing many businesses to close.

For businesses, a change in deal re-structuring will likely be needed to ensure tenants can afford to stay long term and pay their fair share of rent. Fortunately, those changes are coming in the horizon. The good news is that many investors are eager and willing to become new landlords in the commercial space.

For commercial leasing to be a profitable source of revenue for investors, they need tenants to fill the space. Investors understand the need for flexibility in deal structure for new leasing terms. 

Here three leasing structures for the commercial space to be viable:

  • Gross profit sharing for the term of the lease
  • Base rent with a percentage sharing that is set for a period of time
  • Short-term rental relief during the pandemic period

 

Paul Xumsai

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