Advantages of Leasing Commercial Space Have Over Residential Space

While there are many people who initially began their real estate journey by investing in residential properties, there are also successful investors who have made millions by investing in commercial real estate Austin. Commercial properties range from an office building to a mixed use property with storefronts on the first floor and above located are apartments. 

Getting the right tenant for your office space can be challenging. But once you get the right tenant to lease your space, there are some very significant advantages. The leases for residential properties are regulated by the government. But, commercial leases aren’t subjected to the same scrutiny. And that opens up the possibilities for you to negotiate deals thereby protecting you and giving you more tenant options. 

Another reason why commercial leases are different is that the tenant utilizes the space not for living there but for running their business. Residential tenants keep moving homes because of several reasons such as new job, getting married or having children. But, moving a business is hard once it has been established in a location. And if the tenant has found the perfect location for his office in Austin, then there is no reason to move. 

Also, if you are wondering which one is a better commercial investment – REIT or direct Property, then click here.

So, according to the commercial real estate, Austin, there are niche benefits of leasing a commercial property and below are the top five that you definitely should consider when you plan to invest in industrial properties or commercial properties –

No rent control laws

Generally, residential property rents escalate up to a limit prescribed by the state’s rent control law. However, there is no such clause for commercial properties. The more the business will get established in a location, it is less likely that your tenant will shift. They will be willing to pay even more rent than they probably are, to keep your property.

Longer lease terms

Mostly, residential leases are for 1 year and the tenant is given the option to renew for the next year or go from month to month. Some residential landlords may get 2 – 3 years lease, but that is a rare case. Nowadays, it is common to see a lease that has expired a while ago and is now going on a month to month basis. This means that the tenants can move on very quickly.

It is a very rare case when a commercial lease will have a one-year term. Since it is neither beneficial for the landlord nor the tenant. The tenant themselves need a long lease term because they will want to lock their overhead expenses for a longer period. If your commercial space is leased by a retail tenant then locking the lease for a longer-term becomes very important. The Landlords also benefit from longer lease terms. If a bank wishes to lease out your space, then this will be a favorably long term lease when they consider you for a refinance.

Comfort, Constancy and Collateral value

Entrepreneurs and businessman will most likely be attracted to your commercial property if it is located in a prime location. The close proximity to markets, malls, shopping centres, etc. works to your benefit. They will be leasing your property for a longer duration which will ensure fair returns for a longer period of time. This will also reduce potential losses and enhance the stability of your investment. Thus, it’s a win-win situation for both tenants as well as the landlord. The tenants will get a clear idea of their fixed overhead expenses and the landlord will get assured fixed returns. 

Reduced chances of default

This is not a blanket rule, but medium to large scale companies are less likely to default a rent payment, unlike residential tenants. The reason being a company will have the goodwill associated with its brand. And their need for stability in operating their base, they will most likely agree to pay the upfront for months or even years of rental value. This makes it easier for you as a landlord to negotiate a fixed sum deposit. The tenants will not want to leave the location anytime soon because of their additional investment in their corporate office.

Negotiating Responsibilities

When there are critical obligations like major repairs and maintenance, the standard residential contracts have fixed responsibilities of the landlord.  Since the lease terms are on a yearly basis, if the tenant vacates after a year it is the landlord who will pay the bills of maintenance and keep the house up to date for the next tenant.

Such is not the case with commercial properties. The companies are free to move the furniture and fixtures and undertake any modifications that will suit their office needs. They often redo the decors and paint the walls that match their company’s logo theme. Thus you will have nothing to worry about as the finance of the repairs and the maintenance will be undertaken by the organizations themselves.

Connect with GW Partners

Now that you are aware of the advantages of owning commercial properties and leasing it, then connect with a reliable Commercial Real Estate firm in Austin. Someone with a wide knowledge of the entire commercial real estate spectrum.  Right from commercial property management to various real estate services to ease out the investment and maintenance process for you.