BreakThru Realty

Guide

Gross, Modified Gross and Triple-Net Leases: What Each One Costs

A commercial rent quote means nothing until you know what it includes. Under a gross lease the landlord pays the building's operating costs; under a triple-net lease the tenant pays its share of property taxes, insurance and common area maintenance on top of rent; a modified gross lease splits them. The same $30 per square foot can be the cheapest or the most expensive quote on the street.

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BreakThru Realty · Founder and Broker of Record: Tyson E. Sam, Florida License 3565210

Gross and Full-Service

The quoted rent includes the building's taxes, insurance, maintenance and, in a full-service office lease, utilities and janitorial. Many leases set a base year: the landlord covers operating costs up to that year's level and the tenant pays its share of increases afterwards. Simple to budget; the landlord carries the risk of rising costs, and prices the rent to cover it.

Triple Net (NNN)

Base rent plus the tenant's proportionate share of the three nets: property taxes, building insurance and common area maintenance, billed as an estimate per square foot and reconciled against the actuals each year. Most retail and industrial space in Florida is quoted this way. The tenant carries the cost risk, so the base rent is lower, and the reconciliation is where disputes start.

Modified Gross

Somewhere between: the tenant pays some operating costs (often utilities and janitorial inside its space) and the landlord pays others, or the tenant pays increases over a base year. The lease itself defines the split, and no two are alike, so the definitions matter more than the label.

Comparing Quotes

Convert every quote to the total annual cost per rentable square foot with everything in, and compare that. Ask every landlord for last year's actual CAM, tax and insurance charges and the estimate for next year, what CAM includes (management fees and capital items are the usual surprises), and whether there is a cap on increases. The cost-to-occupy calculator does the arithmetic.

For Landlords

A triple-net lease passes cost risk to the tenant and makes the income predictable, which is why investors pay more for net-leased buildings. A gross lease is easier to market to small tenants and lets the landlord control the building's upkeep. The right structure depends on the tenant, the building and what you intend to do with it; see how we lease commercial property.

Ask a Commercial Specialist

Call or text (786) 914-1017 or email sales@breakthrurealty.com. A licensed BreakThru Realty agent follows up within one business day.

Frequently Asked Questions

What does CAM include?
Common area maintenance: landscaping, parking lot upkeep and lighting, common-area utilities and cleaning, security, and often a management fee and insurance. What counts is defined in the lease, and capital replacements (a new roof, repaving) are the main thing to negotiate out or cap.
Is NNN rent cheaper than gross rent?
The base rent is lower, but the nets are added on top. Whether the total is cheaper depends on the building's actual operating costs. Compare the all-in cost per square foot, not the quoted rate.
What is an absolute net lease?
A lease where the tenant pays every cost, including the roof and structure, usually on a single-tenant building with a long term. The landlord collects rent and does nothing else, which is why these trade at the lowest cap rates.

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