What the terms “Triple Net” and “Gross” mean…
“If it’s not Triple Net -It's Gross”
By Michael J. Lorelli, Vice President of Commercial Asset Management, High Associates, Ltd.
When leasing a commercial/industrial facility, the rent you are quoted may not be your only lease-related expense. Most
commercial or industrial leases are structured either as “gross” or “triple-net” types. Before you sign either type of
lease, be sure to understand how their characteristics and nuances may affect your budget and the operation of your
facility.
In a gross-lease arrangement, the quoted rent typically includes all other building operating expenses. These would
include all utilities such as water, sewer, electricity and gas; all maintenance items such as lawn care, snow removal,
exterior paint touch-up; HV AC repairs; and services such as janitorial, trash removal and the costs related to providing
a building superintendent. Gross leases are found most commonly in Class-A and Class-B office space.
Class-A and Class-B office buildings usually have areas shared by all tenants such as a lobby and restrooms. These
buildings rarely have separately-metered utilities, so a gross-lease arrangement is most practical. Most gross leases in
the Central Pennsylvania marketplace are quoted with reference to a base year. This practice means that during the first
year of occupancy, all expenses are included in the rent quoted in the lease. However, in subsequent years, each tenant
company is responsible for its pro-rated share of the increase in the cost of the building expenses, based on their
portion of the total leasable square footage of the building.
A triple-net lease is the most common form of lease structure for industrial, flexible and office facilities, in which
there is no shared or common tenant space such as a lobby and restrooms. In a triple-net lease arrangement, like the
gross lease, there is a set monthly or annual base rent. But unlike the gross lease, the lessee is responsible for 100
perce