The main difference between a gross lease and a net lease lies in who bears responsibility for operating expenses. In a gross lease, the landlord covers these costs while in a net lease, these costs are passed on to the tenant in addition to their rent.
What are the differences between gross net and percentage lease?
Tenants in percentage leases pay a base rent plus a percentage of their monthly or annual revenue. As a result, the base rent is typically reduced even further compared to a net or gross rent payment. In addition to negotiating the base rent, a “breakpoint” may be negotiated by the landlord and tenant.
What are the pros and cons of a gross lease?
- Landlords can roll additional costs into the rent.
- Landlords can pass on inflationary costs to the tenant.
- Tenants aren't responsible for any costs other than the rent.
- Tenants can focus their time on their business rather than the rental space.
What is the difference between gross and NNN leases?
In an absolute gross or full service lease, the quoted rate will include basic utilities such as electricity, gas, water and sewer. A triple net or NNN lease is one where the rent is quoted as a base rent net of, or not including, the expenses for real estate taxes, building insurance and common area maintenance.
What is the benefit of a net lease?
Net leases require tenants to pay expenses such as taxes or insurance in addition to a monthly rent payment. Rents are generally lower with net leases than traditional leases. The more expenses a tenant has to bear, the lower the base rent a landlord charges.
What is a double net lease?
A double net lease is a rental agreement whereby the tenant agrees to cover the costs of two of the three primary property expenses: taxes, utilities, or insurance premiums. Also known as a net-net (NN) lease, these are most commonly found among commercial tenants.