I am often approached by homeowners who want to know about long-term corporate leasing. If this is something that you’ve considered or been curious about, then it’s best to start with clearing away a few misconceptions.
First off, “corporate leasing” is an often misunderstood and misused term. Usually, people attribute more meaning to it than is really there. Regardless of what you may have heard, a corporate lease is nothing more than an instance where a tenant leases a property while they are employed in the area, usually on a limited term assignment. The more appropriate term is “corporate tenant”, which is also open to misinterpretation.
While these terms make it sound that a corporation is involved, a corporation rarely signs or guarantees the lease. The tenant signs and guarantees the lease in almost every case. Before the 1990’s, a corporation would often guarantee the lease. Times have changed.
There are some cases where this is less desirable for the landlord. If the tenant is a foreign person, then the landlord is at risk of having no remedy or recourse, other than the security deposit, should the tenant leave the property in disrepair. Neither a credit report nor a judgment obtained in court follows foreign citizens.
Additionally, it’s common for the corporation to require that the tenant be allowed to terminate a lease with a 60-day notice with no penalty. That clause – and the requirement that the landlord agree to it -- is usually the only real involvement of the corporation.
That being said, there’s no reason to target corporate tenants, nor is there really a way to do so even if you wanted to. When a corporate tenant chooses a particular property to lease while they are here, it’s purely coincidental. It’s also a fairly uncommon occurrence. I am not sure of the actual odds, but I estimate the chances of leasing to a corporate tenant to be 1 in 600. As I mentioned earlier, it is purely by chance and, in my opinion, not always the best choice.
Until next month,