Commercial property leases can take numerous forms, from gross to absolute net. Many of the particulars are standard within each type, but there are variations. Therefore, always carefully review a lease's terms to ensure you aren't surprised by what you are responsible for paying.
Net leases generally are for single-tenant properties. They are often associated with office buildings, warehouses, and retail spaces. Retail properties probably utilize net leases more than any other category. These include fast food restaurants, convenience stores, gas stations, and big box stores.
Triple net leases may be appealing to some real estate investors because the tenant agrees to do most of the heavy lifting under this type of lease structure.
Triple net leases, also called NNN leased properties, can potentially offer real estate investors several advantages over other types of lease structures, but they aren’t without their potential drawbacks, either.
Commercial leases typically fall into three categories: gross leases, modified gross leases, and net leases. Within the net lease category, there are single, double, triple, and absolute subcategories. Which is most advantageous for you depends on the type of business, the circumstances, and whether you are the landlord or the tenant. Knowledge is power, and understanding the differences between the leases can help you decide which is most suitable.
A modified gross lease is a variety of commercial real estate lease. In this structure, the tenant pays base rent and a proportional share of some other property costs, including taxes, utilities, insurance, and maintenance. A modified gross lease sits between a gross lease, where the landlord pays for all operating expenses, and a net lease, which passes on property expenses to the tenant.