A lease structure in which the tenant pays a fixed rent and the landlord covers all (or most) operating expenses, including taxes, insurance, and maintenance. Gross leases eliminate most variable expense exposure for tenants but typically have higher base rents.
A true full-service gross lease includes all building expenses in a fixed rent. However, many "gross" leases include escalation provisions - the tenant pays increases in operating costs above a base year or expense stop. These provisions can transform an apparent gross lease into something approaching NNN economics over time.
A tenant signed what was marketed as a "gross lease" with no variable expenses. The lease included a broad expense escalation clause tied to the CPI. Over a 10-year term, the tenant's effective rent increased 62% above the base.
Ask specifically: what escalation provisions does this gross lease contain? A gross lease label does not guarantee flat costs over time - always model the total cost including escalation provisions.
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Start Free AuditThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.