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Commercial real estate leases are long-term commitments with a lot of legal language, often including many complex clauses that can materially impact the economics of a deal. And with many of these leases having terms of 5, 10, 15 years or more, making sure you understand all parts of a lease agreement is extremely important when buying ...
May 9, 2024 · This article provides a detailed analysis of triple net leases, discussing their structure, advantages, and key points to consider for those engaged in commercial leasing. TL;DR: A Triple Net Lease requires tenants to pay for property taxes, building insurance, and maintenance, in addition to rent.
- Full-Service Lease/Gross Lease
- Net Lease
- Modified Gross Lease
- Absolute NNN Lease
- Percentage Lease
- Negotiation Tips and Exceptions
Signing a full-service lease(also called a gross lease) means you are responsible for paying the base rent. Generally, the landlord handles the additional building expenses, including maintenance fees, insurance, and real estate taxes. Typically, this results in relatively high rental rates — but as a tenant, you only receive one bill that covers a...
A net lease refers to a category of commercial real estate leases. Net leases usually stipulate that tenants pay a proportionate share of the building’s operating expenses: common area maintenance (referred to as CAM) fees, property taxes, and insurance. Types of net leases include triple, double, and single. Each type of net lease has its own leve...
A modified gross lease occupies the middle ground between a gross lease and a triple net lease. In general, a modified gross lease means that the tenant pays base rent, utilities, and a portion of operating costs. The details vary from contract to contract. In some modified gross leases, tenants pay only base rent and utilities for the first year b...
Sometimes people incorrectly use the terms “absolute NNN lease” and “triple net lease” interchangeably. They are not, however, the same. Usually, triple net leases require tenants to pay for some or all building repair expenses (such as structural repairs or repairs to the roof), but in some cases, the landlord will assist with those expenses. Conv...
Percentage leases require tenants to pay a base rent in addition to a percentage of gross business sales (once sales pass a threshold). Landlords often ask for seven percent. Be wary if one asks for 10 or 12 percent. Retail mall outlets typically have these types of commercial real estate leases. One upside of percentage leases is that they typical...
These commercial real estate lease categories don’t represent absolute rules, though they can give you a general idea of what costs and clauses to expect for each one. Remember this: every contract is different, and every contract is negotiable. Read the fine print and review it with your commercial real estate advisor and your attorney before sign...
Jan 1, 2023 · The NNN lease, often just called the “triple net lease” is a popular lease structure in commercial real estate. In this article, we defined the triple net lease in the context of the overall spectrum of all commercial real estate leases.
Dec 27, 2022 · A full service lease, sometimes called a gross lease, is defined as a lease structure where the landlord is responsible for paying all operating expenses for the property. However, it’s important to note that the term “full service lease” can take on various meanings depending on who you are talking to or what part of the world you are in.
May 6, 2021 · This article defines the various lease agreements and industry jargon to help you better understand what they mean to landlords and tenants – and the relationships between them. In the simplest terms, a lease agreement is a document that lays out the allocation of risk and responsibility for the use of property in exchange for money.
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A triple net lease (NNN) is a common type of lease structure in which the Tenant pays the expense to operate the property in addition to the base rent. The Tenant becomes liable for paying the various operating expenses based on the percentage of the building that the Tenant occupies. The “NNN” stands for “net, net, and net,” which includes:
