Pick the wrong structure and you'll overpay for years. Here's how each lease type actually works.
Every commercial lease sorts into one of three families: gross, modified gross, or net. The difference determines who pays for taxes, insurance, CAM, utilities, and repairs - and it can swing your true occupancy cost by 20–40%. This guide breaks down each structure with examples, shows which lease type dominates each asset class, and flags the specific line items to watch during LOI negotiation.
| Structure | Base Rent | Taxes | Insurance | CAM | Utilities | Roof/Structure |
|---|---|---|---|---|---|---|
| Full-Service Gross | T | L | L | L | L | L |
| Industrial Gross | T | L | L | L | T | L |
| Modified Gross | T | Split | Split | Split | T | L |
| Single Net (N) | T | T | L | L | T | L |
| Double Net (NN) | T | T | T | L | T | L |
| Triple Net (NNN) | T | T | T | T | T | L |
| Absolute NNN | T | T | T | T | T | T |
T = Tenant pays, L = Landlord pays. Base rent is always the tenant.
Never compare leases by base rent alone. Convert every offer to a 'total occupancy cost' number that includes base rent, estimated NNN or pass-throughs, and any tenant-paid utilities and maintenance.
Example: Suite A quotes $28 PSF full-service gross with a base year. Suite B quotes $22 PSF NNN + $12 NNN = $34 PSF. Suite A is cheaper today, but if base year taxes reassess after a sale, occupancy cost can climb quickly. Always model year 1, year 5, and holdover year.
Daniel Weber offers free, no-obligation strategy conversations for tenants, landlords, and investors across Southlake and DFW.