A hybrid lease structure common in industrial and warehouse properties where the tenant pays a base rent that includes some operating expenses, with specific categories (typically property taxes, insurance, and utilities) passed through separately.
Industrial gross leases blend elements of gross and net lease structures. The landlord includes certain expenses (often common area maintenance and structural items) in the base rent, while passing through other categories (typically property taxes, insurance, and sometimes utilities) as separate charges. The specific allocation varies by market and property. Unlike a true gross lease, the tenant has direct exposure to increases in the pass-through categories. Unlike a triple net lease, the tenant is not responsible for all operating expenses. Industrial gross leases are the dominant structure in multi-tenant industrial parks and flex space.
A landlord markets a space as an "industrial gross" lease with taxes and insurance passed through. At reconciliation, the tenant discovers that common area maintenance costs, which were supposed to be included in base rent, are being billed separately with no explanation.
Get a clear written breakdown of which expenses are included in base rent and which are passed through. Industrial gross lease structures vary widely, and the label alone tells you nothing about the actual allocation. Compare total occupancy cost, not just base rent.
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Find My OverchargesThis 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.
