Understanding
Commercial Leases
The advertised rental rate is not always the full cost of occupying a commercial space. The lease structure determines which expenses are included and which may be billed separately.
Gross Lease
Operating expenses are generally covered by the landlord through the rent. Some utilities, services, or expense increases may be billed separately.
Modified Gross
The landlord and tenant share selected operating costs. Exactly which expenses each party pays is negotiated in the lease.
Triple Net (NNN)
The tenant generally pays base rent plus allocated property taxes, property insurance, and maintenance or operating expenses as defined by the lease.
Full-Service Gross
Often used for office space. Rent commonly includes standard building services and operating expenses, subject to exclusions and expense pass-throughs.
What About CAM?
CAM stands for Common Area Maintenance. It is an expense category, not a lease type. It can include landscaping, parking lot upkeep, common-area lighting, and other shared costs, depending on the lease.
Other Structures to Know
Single Net (N), Double Net (NN), Absolute Net, and Percentage Rent leases also exist. Terms and expense responsibilities vary by agreement.
The Takeaway
Compare total occupancy costs, not just base rent. Confirm what is included, how charges are calculated, and who pays for repairs.