How Gross is Your Lease?

By: Ted Parcel

There are multiple ways to divide up the costs of leasing a property and of course every one of the alternatives is utilized somewhere.  This discussion is about the most common types of arrangements for dividing up the expenses.

A typical property has components of rent, property taxes, insurance, maintenance, utilities and common area charges (CAM).  So how does one divide the costs?

Single Net Lease- The tenant pays rent plus property taxes

Double Net Lease- The tenant pays rent, property taxes and insurance

Triple Net Lease- The tenant pays rent, insurance, and maintenance.  (This is often confused with an absolute net lease.)

Absolute net lease- Tenant pays rent plus all expenses including insurance, maintenance, utilities and common area charges. 

Modified Gross Lease- The tenant pays rent, CAM and utilities.  The landlord pays the rest

Gross Lease- the tenant pays rent and the landlord pays the expenses

Full Service Lease- Tenant pays insurance, plus excess utilities actually used over a base amount and increases in expenses over a base year amount.

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About the Author:

Scope of Service Experience Mr. Parcel has more than thirty years of varied commercial experience in the technical industries. Experienced with chemicals, pharmaceuticals, oil and gas, paper and agricultural markets and supplies to these markets. Former Corporate Real Estate Director, Profit Center Manager and Procurement Manager. Education MBA, Finance. University of Pennsylvania, Wharton School, Philadelphia, PA BS, Chemical Engineering, University of Delaware, Newark, DE Completed Strategic Marketing Management at the Harvard Business School. Background & Experience NAI Global, Princeton, NJ Senior Vice President, Corporate Services Responsible for the NAI Global Corporate Services function including Account Management and Transaction Management and the development of best practices.