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Are Commercial Business Tenants better than Residential Tenants?

Updated: Mar 16

Are Commercial Real Estate Tenants better than Residential Tenants? The answer is "Yes" in our opinion.

After being in the business of renting directly to business tenants and residential tenants for the past 30 years, our conclusion is that commercial business tenant are by far a superior group of lease tenants versus residential tenants.

Here are the reasons why business tenants are better than residential tenants:

  1. More Commitment - A typical business lease will be between 3-5 years or longer. However, a residential lease is normally 1-2years. The longer the lease, the more of a commitment that a tenant is usually showing.

  2. More Investment - A typical business that leases a space from you will usually be committing to invest a sizable amount of build out dollars into their lease space. If they are putting in their own money for a build out, then they are likely going to want to see a return on investment and not give up so easily at the first sign of any trouble. A residential tenant almost never has to make an up front financial investment into the house or apartment that they are leasing. They have a lot less to walk away from if they need to leave.

  3. Larger Security Deposit and Personal Guarantee - A commercial business tenant will likely be giving a much larger security deposit as well as signing a much strong personal guarantee. This too makes the commercial tenant less likely to give up so easily.

  4. Government Protections for Rent Control and Evictions not likely with Business Tenants - A commercial tenant is not likely to receive the same possible government protections as residential tenants do in some more liberal states like California or New York where the government protects residents from harsh evictions. Without any government safety nets, commercial business tenants are more likely to stick around longer and not try to break their leases or worse yet squat for long periods during an eviction.

  5. Better Educated - A commercial business tenant is likely to be of a higher education and experience in life. Someone who starts a business or gets a business franchise is likely of higher eduction. This type of person is more likely to try and work things out and not just cut and run.

Conclusion: - If you have a choice of owning a retail commercial plaza over a residential apartment building, our choice would be the commercial plaza. You'll still have some turnover and even some occasional worst case scenario abandonments and cut and runs. However, you'll find commercial tenants to be a lot more professional, stable and committed to staying longer than residential tenants.

We are looking for potential business partners!

We want to find business partners and qualified real estate investors who will come in on projects with us that mutually make sense where we can all come out ahead and make good money.

Feel free to email, text or call us with any questions about any of our media articles or any questions you have about being a potential business partner or investor with us.


Greg Arbutine

Alan Development Co-Owner

Invest in real estate with along side with us at Alan Development! We are the real estate experts that you can trust.

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Mar 09
Rated 5 out of 5 stars.

Nice article!

  Since 1992, Alan Development has been procuring land and developing  commercial, mixed-use and multi-family projects.    Our company also acquires existing buildings and turns them into viable income properties.   
We do projects completely on our own or partner with corporations, investors, lenders or private individuals.   
Contact us today to discuss investment and partner opportunities. 
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