The five most common forms of commercial real estate leases are gross, single net, double net, triple net, and percentage.
A gross lease is a fully serviced lease.
A fully serviced lease means the landlord pays all or most of the property expenses, such as property taxes or repairs made to the common areas. Typically, these costs are added to the tenants rent. Gross leases occur mainly in office properties and warehouse spaces.
A single net lease requires the tenant to pay property taxes in addition to the base rent.
A single net lease can be used in any type of commercial lease property.
A lessee agrees to pay for real estate taxes and commercial property insurance, in addition to the rent, in a double net lease.
In such a lease, the landlord is accountable for any expense involving structural repairs and common area maintenance. Double net leases are also used in any type of commercial lease property.
A tenant is responsible for paying all real estate taxes, building insurance, maintenance on the property, and normal rent in a triple net lease.
Triple net leases associate all costs to repair and maintain all common areas to the lessee. Usually these leases are used for commercial freestanding buildings and retail spaces.
Lastly, a percentage lease requires the tenant to pay the base rent plus a monthly percentage of the tenant revenue earned.
As you might expect, a percentage lease is most common among retail spaces particularly in high end shopping areas.
In a commercial property transaction, several of these terms may float around. The type of lease that works best for your business success is only one of many business points we can negotiate.