Gross Lease

What is a gross lease?

A gross lease is a type of commercial lease where the landlord charges the tenant a single base fee for use of the property. Sometimes called a full-service lease, gross leases are popular with tenants since they provide a predictable monthly payment that businesses can factor into their monthly budget.

With many other types of commercial leases, such as a net lease, the landlord may charge the tenant base rent, plus a monthly fee for other costs like property taxes, insurance costs, and fees for building maintenance. But with a gross lease, the landlord can factor these operating expenses into the base rate they charge the tenant, resulting in a simpler, streamlined process.

Gross lease FAQs

What’s the difference between gross lease and net lease?

Gross and net leases are similar in that they are both commercial leases with set monthly fees. However, with a net lease, the tenant pays certain additional costs beyond the base rent fee.

There are a few different types of net leases: single net leases (sometimes abbreviated to N), double net leases (NN), and triple net leases (NNN).

With a single net lease agreement, tenants typically pay base rent and property taxes for the rental property, while the landlord assumes responsibility for insurance fees and maintenance costs.

In a double net lease, the tenant pays base rent, property taxes, and insurance costs, while the landlord pays maintenance expenses. And with a triple net lease, the landlord pays for any structural or roof repairs to the property, while the tenant pays everything else.

What is a modified gross lease?

True to its name, a modified gross lease is a gross lease with slight modifications. Tenants still pay a base monthly rental fee, but may also split operating costs with the landlord. These operating costs could include things like property taxes and insurance, or maintenance costs.

What's the difference between a gross lease and a percentage lease?

A percentage lease is a unique type of commercial lease agreement in which the tenant pays a base monthly rent fee, plus a percentage of any gross business sales earned on the landlord’s property. This type of commercial lease agreement is more common for retail businesses.

How do you calculate gross lease?

To determine how much rent to charge tenants with a gross lease, landlords typically calculate a base rent fee that's based on the square footage of the space to be rented, plus a percentage of their operating expenses. This ensures the landlord is able to charge a base rent fee that fairly reflects the amount they spend to maintain the property.