01
Gross Lease
How expenses work
You pay rent; the landlord covers operating expenses but may recoup costs with load factor.
Common use
Any commercial space
Commercial Real Estate · Orlando & Central Florida
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Commercial Leases?
Let’s review the different types of commercial leases to prepare for negotiations and your expenses as a tenant.
What is a Full Service or Gross Lease?
In a full service lease, aka “gross lease,” the landlord covers all the building expenses, including maintenance fees, insurance and real estate taxes. You, the tenant, are responsible for base rent.
Triple Net Lease
A triple net lease is essentially the opposite of a gross lease. The tenant agrees to pay for all building operating expenses: maintenance fees, building insurance and property taxes.
Double Net Lease
In a double net lease or “net net” lease, tenants pay property taxes and building insurance premiums. Maintenance fees excluded.
Net Lease
A net lease usually stipulates that tenants pay a portion, if not all, of property taxes, insurance and maintenance.
Modified Gross Lease
In a modified gross lease, tenants pay base rent, and after the first calendar year, or base year, they pay a pro rata share of operating costs.
Absolute Lease
An absolute lease delivers the landlord from all responsibility for the building. Tenants must cover all building expenses, including maintenance or repairs to the roof and structure.
Negotiation Tips and Exceptions
Every lease is negotiable to some degree. The only way to be sure which expenses fall under your purview is a thorough review of the lease with your broker and attorney.
A Guide to Different Types of Commercial Leases
The lease label is only the starting point. Compare who pays operating expenses, what the space is used for, and how the agreement fits your business.
02
Modified Gross Lease
How expenses work
Rent plus a portion of annual operating expenses after the first year.
Common use
Any commercial space
03
Triple Net Lease
How expenses work
Rent plus taxes, insurance, and maintenance fees.
Common use
Any commercial space
04
Double Net Lease
How expenses work
Rent plus taxes and insurance.
Common use
Any commercial space
05
Net Lease
How expenses work
Rent plus some degree of taxes, insurance, and maintenance fees.
Common use
Any commercial space
06
Absolute Lease
How expenses work
Rent plus all building expenses, including roof and structure repairs.
Common use
Long-term leases to credit tenants
07
Percentage Lease
How expenses work
Rent plus a percentage of monthly sales.
Common use
Retail space
Questions about leasing
What should I compare besides a commercial lease’s base rent?
Review the expenses assigned to the tenant, rent increases, maintenance obligations and renewal terms in the actual lease. A label such as gross or triple net is only a starting point; the contract defines the responsibilities.
Can Jeff help both tenants and property owners?
Orlando Commercial Realty offers tenant representation and assistance with tenant mix for property owners. Discuss the space, intended use, budget and timing with Jeff to define the services you need.
How should I use the lease comparison table?
Use it to identify questions for your broker and attorney, rather than treating it as a substitute for reading a lease. Expense allocations can differ between contracts with the same lease label.
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Answers updated .