CENTURY 21 COMMONWEALTH COMMERCIAL / 161 MOUNT AUBURN STREET / WATERTOWN, MA 02472
Commercial Lease Types
Almost every aspect of a lease is negotiable and terminology varies from market to market.
Here are a few of the most widely used lease types:
Gross Lease: Also called the "Full Service Gross Lease" where the Landlord pays all of the
operating expenses of the building (property taxes, insurance, common area maintenance,
janitorial, etc.) for the duration of the term.
Modified Gross Lease: Also referred to as an "Industrial Gross Lease", the Modified Gross Lease
requires that the Landlord pay for one or more of the operating expenses.
Commercial Agent Dan markets his client’s 1,500 square foot light manufacturing
space at $0.95 per square foot industrial gross where the tenant pays for his/her own trash
services and electricity. The landlord will pay for all property taxes, insurance, common area
maintenance and municipal water.
There is no standard for which expenses are the Landlord’s responsibility. Landlord and Tenant
can agree as to who pays for what.
Net Lease: In addition to rent, the Tenant pays for their pro rata share of operating expenses
including property taxes, insurance and common area maintenance. In most cases, the
Landlord is responsible for the roof, parking lot and possibly the foundation.
Triple Net Lease: Also known as a “NNN Absolute” lease, the Tenant is not only responsible for
the operating expenses as in a Net Lease, he or she is obligated to pay for all repairs to the
property. The Landlord simply collects rent which, unlike a Gross Lease, represents the
Landlord’s net operating income. Net leases are very popular with single tenant retail and
industrial users. In the Metro Boston market, this is the most popular type of lease.
Percentage Lease: Also known as an “Shopping Center Lease”, the Percentage Lease is
additional rent due to the Landlord beyond just the base rent. The extra rent is based on
sales over a specified amount, called the breakpoint. This type of lease use