What is the difference between gross, modified gross, and NNN leases?
Lease structure determines what rent includes and what costs are passed through. Two spaces with similar asking rents can have very different total occupancy costs.
What it means
A gross lease generally includes more property expenses in the quoted rent. A triple net, or NNN, lease usually requires the tenant to pay base rent plus a share of taxes, insurance, and common area maintenance. A modified gross lease sits between those structures and depends on the negotiated terms.
Why it matters
Lease structure affects monthly cost, predictability, and risk. A lower base rent under a NNN lease may cost more than a higher gross rent once expenses are added.
Common mistakes
The common mistake is comparing spaces by asking rent only. Businesses should ask what is included, what is estimated, what can increase, and whether there are caps, stops, or reconciliations.
Questions to ask
Ask whether the lease is gross, modified gross, or NNN; which expenses are included; how CAM is calculated; whether estimates are reconciled; and how future increases are handled.
Questions businesses usually ask
Is a gross lease always better than an NNN lease?
No. A gross lease can be simpler, but the best structure depends on total cost, market norms, the property, and the tenant's tolerance for variable expenses.
What does NNN stand for?
NNN means triple net. It usually refers to property taxes, insurance, and common area maintenance passed through to the tenant.