Commercial leases come in a handful of structures that determine who pays for property taxes, building insurance, and maintenance, and how that responsibility is reflected in the rent you're quoted. Two tenants can be handed rate sheets for identical-sized spaces in the same submarket and see wildly different headline numbers — not because one space is a better deal, but because the two quotes are built on different lease structures. Understanding which structure you're being offered, and what it actually obligates you to pay beyond the sticker rate, is the single most important skill for evaluating any commercial lease quote.
In commercial leasing, a "net" lease shifts one or more categories of building operating expense from the landlord to the tenant, on top of a base rent figure. The three most commonly shifted categories are property taxes, building insurance, and common area maintenance (CAM) — and each "net" in the name refers to one of them. A single net (N) lease shifts property taxes to the tenant. A double net (NN) lease shifts taxes and insurance. A triple net (NNN) lease shifts all three: taxes, insurance, and CAM. In practice, "NNN" has become the default shorthand used across most commercial listings, even when a specific deal is technically structured as something slightly different, so always confirm exactly which expenses a given "NNN" quote includes.
Under a true NNN lease, the tenant pays a base rent rate plus a pro-rata share of the building's property taxes, insurance, and common area maintenance. "Pro-rata" means your share is calculated as the percentage of the building's total rentable square footage that your suite occupies — a tenant in 10% of a building's square footage typically pays 10% of the building's total CAM, tax, and insurance bill for the year. The quoted base rent on an NNN listing will look lower than a comparable gross-lease quote, which is exactly why NNN listings can be misleading if you compare only the headline rate. The all-in cost is what matters, and that requires adding the estimated CAM/tax/insurance rate to the base rent before comparing it to anything else.
Who bears which costs under NNN: the tenant bears property taxes, building insurance, and CAM (in addition to base rent, and typically in addition to their own utilities, interior maintenance, and often janitorial for their own suite). The landlord bears structural repairs and, in most standard NNN leases, capital replacements like a roof or HVAC system replacement — though this varies by lease and is a critical point to negotiate, since a poorly drafted NNN lease can push even capital costs onto the tenant. NNN leases are common in retail, industrial, and single-tenant net-lease properties.
Under a gross lease, sometimes called a full-service gross lease, the tenant pays one flat, all-in rent figure, and the landlord uses that amount to cover property taxes, building insurance, common area maintenance, and typically base-building utilities as well. The appeal is budgeting simplicity: one number, no separate CAM bill, no year-end reconciliation surprise. The tradeoff is that the base rate is quoted higher than an NNN rate would be for a comparable space, because the landlord has priced their expense exposure into the number up front rather than passing it through separately.
Who bears which costs under gross: the landlord bears property taxes, insurance, CAM, and often base-building utilities and janitorial for common areas. The tenant typically still pays for their own suite's utilities if separately metered, their own interior janitorial, and anything explicitly carved out in the lease. Many gross leases include an "expense stop" or "base year" clause: the landlord covers expenses up to the level they were in the year the lease started, and any increase above that base year gets passed through to the tenant in later years. This means a gross lease can behave more like an NNN lease over time as operating costs rise — read this clause carefully, since it's one of the most common sources of tenant surprise in an otherwise simple-sounding gross lease.
A modified gross lease sits between NNN and full gross: the landlord and tenant split responsibility for operating expenses according to whatever the specific lease negotiates. A common pattern has the landlord covering property taxes, insurance, and structural/common-area maintenance, while the tenant covers their own utilities, janitorial, and sometimes a capped or negotiated share of CAM. Because "modified gross" has no single industry-standard definition, the label alone tells you almost nothing — two modified gross leases can allocate costs completely differently. The only way to know what you're actually agreeing to is to read the expense-responsibility section of the lease itself, line by line, rather than relying on the lease-type label on a listing sheet.
An absolute NNN lease goes a step further than standard triple net: the tenant assumes responsibility for essentially all costs associated with the property, including structural repairs and capital replacements that a standard NNN lease would typically leave with the landlord. This structure is most common in single-tenant, long-term net-lease investment properties (think a freestanding retail building leased to a single national tenant on a 15- to 20-year term) and is generally not something a small-business tenant in a multi-tenant building will encounter. If a listing uses the term "absolute NNN" or "bondable lease," treat it as a signal to have an attorney review the maintenance and capital-repair obligations closely before proceeding.
The "net" lease definitions in this guide follow the plain-language descriptions in the Cornell Law School Legal Information Institute entries on net lease and triple net lease: single net adds property taxes to base rent, double net adds insurance, and triple net adds common area maintenance. That source describes a gross lease as one where the landlord pays these expenses and the tenant pays a single all-inclusive rent. Modified gross has no single standard definition, so we describe it only as a negotiated split. Real leases use their own wording, and the signed lease always controls.
When you compare quotes, the most reliable method is to turn each one into a total cost per square foot per year and then run the numbers in our calculator. If your quote is monthly, our step-by-step guide to calculating lease cost shows the conversion, and our articles on CAM reconciliation and rentable vs. usable square feet cover two other places where quotes surprise people.
The "net" lease definitions in this guide follow the plain-language descriptions in the Cornell Law School Legal Information Institute entries on net lease and triple net lease: single net adds property taxes to base rent, double net adds insurance, and triple net adds common area maintenance. That source describes a gross lease as one where the landlord pays these expenses and the tenant pays a single all-inclusive rent. Modified gross has no single standard definition, so we describe it only as a negotiated split. Real leases use their own wording, and the signed lease always controls.
When you compare quotes, the most reliable method is to turn each one into a total cost per square foot per year and then run the numbers in our calculator. If your quote is monthly, our step-by-step guide to calculating lease cost shows the conversion, and our articles on CAM reconciliation and rentable vs. usable square feet cover two other places where quotes surprise people.
The "net" lease definitions in this guide follow the plain-language descriptions in the Cornell Law School Legal Information Institute entries on net lease and triple net lease: single net adds property taxes to base rent, double net adds insurance, and triple net adds common area maintenance. That source describes a gross lease as one where the landlord pays these expenses and the tenant pays a single all-inclusive rent. Modified gross has no single standard definition, so we describe it only as a negotiated split. Real leases use their own wording, and the signed lease always controls.
When you compare quotes, the most reliable method is to turn each one into a total cost per square foot per year and then run the numbers in our calculator. If your quote is monthly, our step-by-step guide to calculating lease cost shows the conversion, and our articles on CAM reconciliation and rentable vs. usable square feet cover two other places where quotes surprise people.
The "net" lease definitions in this guide follow the plain-language descriptions in the Cornell Law School Legal Information Institute entries on net lease and triple net lease: single net adds property taxes to base rent, double net adds insurance, and triple net adds common area maintenance. That source describes a gross lease as one where the landlord pays these expenses and the tenant pays a single all-inclusive rent. Modified gross has no single standard definition, so we describe it only as a negotiated split. Real leases use their own wording, and the signed lease always controls.
When you compare quotes, the most reliable method is to turn each one into a total cost per square foot per year and then run the numbers in our calculator. If your quote is monthly, our step-by-step guide to calculating lease cost shows the conversion, and our articles on CAM reconciliation and rentable vs. usable square feet cover two other places where quotes surprise people.