Gross Lease / Full Service Lease

In a gross lease, the landlord pays all the operating costs. These expenses can include, but aren’t limited to, property taxes, utilities, maintenance, etc. The landlord pays these expenses using the tenant’s rent to offset the costs. As a result, the base rent is typically relatively high, but is the only cost to the tenant.

Many landlords include some variable cost flexibility in the lease by adding “escalation clauses” that account for an increase of insurance or taxes. They can also include language that allows them to temporarily increase your rent based on variable costs.

Net Lease

The tenant pays all the operating costs. The base rent for a net lease is lower than a gross lease, but the tenant also pays fixed operating expenses such as property taxes, insurance, and common area maintenance (CAM) items.

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