Office Properties

Understanding Office for Lease Practices in Oklahoma

To determine the best available office space for your company it is important to understand commonly used terminology in commercial real estate leases.

First and foremost, most terms in a commercial lease are negotiable. When you look at an office for lease flyer or listing, you typically see the base rate (base rent) advertised and the type of lease. For commercial office space in Oklahoma most common types of leases are Full-Service, Modified Gross or NET NET NET (Triple Net).

• What is a Full-Service Gross (FSG) lease rate?
  Full-service lease rates typically include all the costs to maintain the building and common areas as well as property taxes and insurance (not including telephone or Internet services). A full-service lease agreement usually includes the standard cost for utilities per rentable square foot in the rent rate. Utility consumption beyond the standard cost stated in the lease is usually charged back to the tenant. Some full-service leases may also include janitorial services for the tenant’s office space.
   
• What is a Modified Gross (MG) lease rate?
  A modified gross lease rate can vary greatly from landlord to landlord. These lease agreements typically include some, but not all the costs to maintain the building and common areas and may or may not include the property taxes and insurance. Typically, these leases do not include utilities or janitorial services.
   
• What is a NET NET NET (NNN) lease rate?
  A net lease agreement typically only includes the maintenance and repair of the exterior of the structure within the base rental rate. The tenant is responsible for all cost associated with maintaining and operating the property. Any expense paid by the landlord is passthrough to the tenant based on their pro-rata share of the property. The most common pass through items are utilities, landscaping, parking lot and common area maintenance and repairs, property insurance and real estate taxes.
   

Another important office lease negotiating point is who will pay for tenant improvements. Tenant improvements include any changes made to the suite configuration and finishes. These changes may range from changing the paint color on a wall to a total renovation of the entire suite with custom finishes. Many factors influence the landlord’s willingness to contribute to the cost of tenant improvements as part of the office lease. These factors include current state of the office space, length of the lease term, square footage of the office space, credit worthiness of the tenant, how the office space compares to other spaces in the market and how quickly office spaces are leasing in the market.

Please contact one of our brokers to learn more about negotiating your next office lease.