{"id":3000050054,"date":"2021-11-18T11:43:08","date_gmt":"2021-11-18T16:43:08","guid":{"rendered":"https:\/\/www.wework.com\/ideas\/?p=3000050054"},"modified":"2021-11-18T12:05:39","modified_gmt":"2021-11-18T17:05:39","slug":"nnn-lease-versus-a-gross-lease-whats-the-difference","status":"publish","type":"post","link":"https:\/\/www.wework.com\/ideas\/professional-development\/business-solutions\/nnn-lease-versus-a-gross-lease-whats-the-difference","title":{"rendered":"NNN lease versus a gross lease: What\u2019s the difference?"},"content":{"rendered":"\n<p>When <a href=\"https:\/\/www.wework.com\/ideas\/professional-development\/business-solutions\/find-commercial-office-space\">searching for office space<\/a>, you\u2019ll no doubt come across many different types of commercial leases. Two of the most popular are triple net leases (or NNN leases) and gross leases. While both are common, they have significant differences, so it\u2019s important to familiarize yourself with both when shopping for real estate.<\/p>\n\n\n<div data-block_619663e45ce6a class=\"toc align toc-block\">\r\n      <div class=\"toc-block__heading\">in this story<\/div>\r\n  \r\n      <ul class=\"toc-block__list\">\r\n          <li class=\"toc-block__list-item\">\r\n        <a href=\"#what-is-a-lease\" class=\"toc-block__link\">\r\n          What is a lease?\r\n          <span class=\"toc-block__icon\">\r\n            <?xml version=\"1.0\" encoding=\"UTF-8\"?>\r\n<svg width=\"16px\" height=\"16px\" viewBox=\"0 0 16 16\" version=\"1.1\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"http:\/\/www.w3.org\/1999\/xlink\">\r\n    <title>FD8B74A2-3372-42BA-99CD-BCC6C3C6EA13@1x<\/title>\r\n    <defs>\r\n        <filter id=\"filter-1\">\r\n            <feColorMatrix in=\"SourceGraphic\" type=\"matrix\" values=\"0 0 0 0 0.000000 0 0 0 0 0.000000 0 0 0 0 0.000000 0 0 0 1.000000 0\"><\/feColorMatrix>\r\n        <\/filter>\r\n    <\/defs>\r\n    <g id=\"Iconography\" stroke=\"none\" stroke-width=\"1\" fill=\"none\" fill-rule=\"evenodd\">\r\n        <g id=\"icon\/arrow-down\/outline\/16\">\r\n            <rect id=\"Bounding-box\" x=\"0\" y=\"0\" width=\"16\" height=\"16\"><\/rect>\r\n            <g filter=\"url(#filter-1)\" id=\"Icon\">\r\n                <g transform=\"translate(7.500000, 8.000000) scale(-1, -1) rotate(-90.000000) translate(-7.500000, -8.000000) translate(0.000000, 1.500000)\">\r\n                    <polygon id=\"Path\" fill=\"#000000\" fill-rule=\"nonzero\" points=\"8.75 0.792893219 14.4571068 6.5 8.75 12.2071068 8.04289322 11.5 12.542 6.99989322 0.5 7 0.5 6 12.542 5.99989322 8.04289322 1.5\"><\/polygon>\r\n                <\/g>\r\n            <\/g>\r\n        <\/g>\r\n    <\/g>\r\n<\/svg>          <\/span>\r\n        <\/a>\r\n      <\/li>\r\n          <li class=\"toc-block__list-item\">\r\n        <a href=\"#different-types-of-leases\" class=\"toc-block__link\">\r\n          Different types of leases\r\n          <span class=\"toc-block__icon\">\r\n            <?xml version=\"1.0\" encoding=\"UTF-8\"?>\r\n<svg width=\"16px\" height=\"16px\" viewBox=\"0 0 16 16\" version=\"1.1\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"http:\/\/www.w3.org\/1999\/xlink\">\r\n    <title>FD8B74A2-3372-42BA-99CD-BCC6C3C6EA13@1x<\/title>\r\n    <defs>\r\n        <filter id=\"filter-1\">\r\n            <feColorMatrix in=\"SourceGraphic\" type=\"matrix\" values=\"0 0 0 0 0.000000 0 0 0 0 0.000000 0 0 0 0 0.000000 0 0 0 1.000000 0\"><\/feColorMatrix>\r\n        <\/filter>\r\n    <\/defs>\r\n    <g id=\"Iconography\" stroke=\"none\" stroke-width=\"1\" fill=\"none\" fill-rule=\"evenodd\">\r\n        <g id=\"icon\/arrow-down\/outline\/16\">\r\n            <rect id=\"Bounding-box\" x=\"0\" y=\"0\" width=\"16\" height=\"16\"><\/rect>\r\n            <g filter=\"url(#filter-1)\" id=\"Icon\">\r\n                <g transform=\"translate(7.500000, 8.000000) scale(-1, -1) rotate(-90.000000) translate(-7.500000, -8.000000) translate(0.000000, 1.500000)\">\r\n                    <polygon id=\"Path\" fill=\"#000000\" fill-rule=\"nonzero\" points=\"8.75 0.792893219 14.4571068 6.5 8.75 12.2071068 8.04289322 11.5 12.542 6.99989322 0.5 7 0.5 6 12.542 5.99989322 8.04289322 1.5\"><\/polygon>\r\n                <\/g>\r\n            <\/g>\r\n        <\/g>\r\n    <\/g>\r\n<\/svg>          <\/span>\r\n        <\/a>\r\n      <\/li>\r\n          <li class=\"toc-block__list-item\">\r\n        <a href=\"#what-is-a-triple-net-nnn-lease\" class=\"toc-block__link\">\r\n          What is a triple net (NNN) lease?\r\n          <span class=\"toc-block__icon\">\r\n            <?xml version=\"1.0\" encoding=\"UTF-8\"?>\r\n<svg width=\"16px\" height=\"16px\" viewBox=\"0 0 16 16\" version=\"1.1\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"http:\/\/www.w3.org\/1999\/xlink\">\r\n    <title>FD8B74A2-3372-42BA-99CD-BCC6C3C6EA13@1x<\/title>\r\n    <defs>\r\n        <filter id=\"filter-1\">\r\n            <feColorMatrix in=\"SourceGraphic\" type=\"matrix\" values=\"0 0 0 0 0.000000 0 0 0 0 0.000000 0 0 0 0 0.000000 0 0 0 1.000000 0\"><\/feColorMatrix>\r\n        <\/filter>\r\n    <\/defs>\r\n    <g id=\"Iconography\" stroke=\"none\" stroke-width=\"1\" fill=\"none\" fill-rule=\"evenodd\">\r\n        <g id=\"icon\/arrow-down\/outline\/16\">\r\n            <rect id=\"Bounding-box\" x=\"0\" y=\"0\" width=\"16\" height=\"16\"><\/rect>\r\n            <g filter=\"url(#filter-1)\" id=\"Icon\">\r\n                <g transform=\"translate(7.500000, 8.000000) scale(-1, -1) rotate(-90.000000) translate(-7.500000, -8.000000) translate(0.000000, 1.500000)\">\r\n                    <polygon id=\"Path\" fill=\"#000000\" fill-rule=\"nonzero\" points=\"8.75 0.792893219 14.4571068 6.5 8.75 12.2071068 8.04289322 11.5 12.542 6.99989322 0.5 7 0.5 6 12.542 5.99989322 8.04289322 1.5\"><\/polygon>\r\n                <\/g>\r\n            <\/g>\r\n        <\/g>\r\n    <\/g>\r\n<\/svg>          <\/span>\r\n        <\/a>\r\n      <\/li>\r\n          <li class=\"toc-block__list-item\">\r\n        <a href=\"#triple-net-lease-pros-and-cons\" class=\"toc-block__link\">\r\n          Triple net lease pros and cons\r\n          <span class=\"toc-block__icon\">\r\n            <?xml version=\"1.0\" encoding=\"UTF-8\"?>\r\n<svg width=\"16px\" height=\"16px\" viewBox=\"0 0 16 16\" version=\"1.1\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"http:\/\/www.w3.org\/1999\/xlink\">\r\n    <title>FD8B74A2-3372-42BA-99CD-BCC6C3C6EA13@1x<\/title>\r\n    <defs>\r\n        <filter id=\"filter-1\">\r\n            <feColorMatrix in=\"SourceGraphic\" type=\"matrix\" values=\"0 0 0 0 0.000000 0 0 0 0 0.000000 0 0 0 0 0.000000 0 0 0 1.000000 0\"><\/feColorMatrix>\r\n        <\/filter>\r\n    <\/defs>\r\n    <g id=\"Iconography\" stroke=\"none\" stroke-width=\"1\" fill=\"none\" fill-rule=\"evenodd\">\r\n        <g id=\"icon\/arrow-down\/outline\/16\">\r\n            <rect id=\"Bounding-box\" x=\"0\" y=\"0\" width=\"16\" height=\"16\"><\/rect>\r\n            <g filter=\"url(#filter-1)\" id=\"Icon\">\r\n                <g transform=\"translate(7.500000, 8.000000) scale(-1, -1) rotate(-90.000000) translate(-7.500000, -8.000000) translate(0.000000, 1.500000)\">\r\n                    <polygon id=\"Path\" fill=\"#000000\" fill-rule=\"nonzero\" points=\"8.75 0.792893219 14.4571068 6.5 8.75 12.2071068 8.04289322 11.5 12.542 6.99989322 0.5 7 0.5 6 12.542 5.99989322 8.04289322 1.5\"><\/polygon>\r\n                <\/g>\r\n            <\/g>\r\n        <\/g>\r\n    <\/g>\r\n<\/svg>          <\/span>\r\n        <\/a>\r\n      <\/li>\r\n          <li class=\"toc-block__list-item\">\r\n        <a href=\"#what-is-a-gross-lease\" class=\"toc-block__link\">\r\n          What is a gross lease?\r\n          <span class=\"toc-block__icon\">\r\n            <?xml version=\"1.0\" encoding=\"UTF-8\"?>\r\n<svg width=\"16px\" height=\"16px\" viewBox=\"0 0 16 16\" version=\"1.1\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"http:\/\/www.w3.org\/1999\/xlink\">\r\n    <title>FD8B74A2-3372-42BA-99CD-BCC6C3C6EA13@1x<\/title>\r\n    <defs>\r\n        <filter id=\"filter-1\">\r\n            <feColorMatrix in=\"SourceGraphic\" type=\"matrix\" values=\"0 0 0 0 0.000000 0 0 0 0 0.000000 0 0 0 0 0.000000 0 0 0 1.000000 0\"><\/feColorMatrix>\r\n        <\/filter>\r\n    <\/defs>\r\n    <g id=\"Iconography\" stroke=\"none\" stroke-width=\"1\" fill=\"none\" fill-rule=\"evenodd\">\r\n        <g id=\"icon\/arrow-down\/outline\/16\">\r\n            <rect id=\"Bounding-box\" x=\"0\" y=\"0\" width=\"16\" height=\"16\"><\/rect>\r\n            <g filter=\"url(#filter-1)\" id=\"Icon\">\r\n                <g transform=\"translate(7.500000, 8.000000) scale(-1, -1) rotate(-90.000000) translate(-7.500000, -8.000000) translate(0.000000, 1.500000)\">\r\n                    <polygon 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0 0 0 0.000000 0 0 0 1.000000 0\"><\/feColorMatrix>\r\n        <\/filter>\r\n    <\/defs>\r\n    <g id=\"Iconography\" stroke=\"none\" stroke-width=\"1\" fill=\"none\" fill-rule=\"evenodd\">\r\n        <g id=\"icon\/arrow-down\/outline\/16\">\r\n            <rect id=\"Bounding-box\" x=\"0\" y=\"0\" width=\"16\" height=\"16\"><\/rect>\r\n            <g filter=\"url(#filter-1)\" id=\"Icon\">\r\n                <g transform=\"translate(7.500000, 8.000000) scale(-1, -1) rotate(-90.000000) translate(-7.500000, -8.000000) translate(0.000000, 1.500000)\">\r\n                    <polygon id=\"Path\" fill=\"#000000\" fill-rule=\"nonzero\" points=\"8.75 0.792893219 14.4571068 6.5 8.75 12.2071068 8.04289322 11.5 12.542 6.99989322 0.5 7 0.5 6 12.542 5.99989322 8.04289322 1.5\"><\/polygon>\r\n                <\/g>\r\n            <\/g>\r\n        <\/g>\r\n    <\/g>\r\n<\/svg>          <\/span>\r\n        <\/a>\r\n      <\/li>\r\n          <li class=\"toc-block__list-item\">\r\n        <a href=\"#a-triple-net-nnn-lease-versus-a-gross-lease\" class=\"toc-block__link\">\r\n          A triple net (NNN) lease versus a gross lease\r\n          <span class=\"toc-block__icon\">\r\n            <?xml version=\"1.0\" encoding=\"UTF-8\"?>\r\n<svg width=\"16px\" height=\"16px\" viewBox=\"0 0 16 16\" version=\"1.1\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"http:\/\/www.w3.org\/1999\/xlink\">\r\n    <title>FD8B74A2-3372-42BA-99CD-BCC6C3C6EA13@1x<\/title>\r\n    <defs>\r\n        <filter id=\"filter-1\">\r\n            <feColorMatrix in=\"SourceGraphic\" type=\"matrix\" values=\"0 0 0 0 0.000000 0 0 0 0 0.000000 0 0 0 0 0.000000 0 0 0 1.000000 0\"><\/feColorMatrix>\r\n        <\/filter>\r\n    <\/defs>\r\n    <g id=\"Iconography\" stroke=\"none\" stroke-width=\"1\" fill=\"none\" fill-rule=\"evenodd\">\r\n        <g id=\"icon\/arrow-down\/outline\/16\">\r\n            <rect id=\"Bounding-box\" x=\"0\" y=\"0\" width=\"16\" height=\"16\"><\/rect>\r\n            <g filter=\"url(#filter-1)\" id=\"Icon\">\r\n                <g transform=\"translate(7.500000, 8.000000) scale(-1, -1) rotate(-90.000000) translate(-7.500000, -8.000000) translate(0.000000, 1.500000)\">\r\n                    <polygon id=\"Path\" fill=\"#000000\" fill-rule=\"nonzero\" points=\"8.75 0.792893219 14.4571068 6.5 8.75 12.2071068 8.04289322 11.5 12.542 6.99989322 0.5 7 0.5 6 12.542 5.99989322 8.04289322 1.5\"><\/polygon>\r\n                <\/g>\r\n            <\/g>\r\n        <\/g>\r\n    <\/g>\r\n<\/svg>          <\/span>\r\n        <\/a>\r\n      <\/li>\r\n        <\/ul>\r\n  <\/div>\r\n\n\n\n<p>Different lease types exist primarily to divide up the expenses of running the property in different ways. It\u2019s crucial to understand who\u2019s responsible for what before you enter into any lease agreement.<\/p>\n\n\n\n<p>So, what\u2019s the difference between a triple net lease and a gross lease? Before we dive into the details, let\u2019s start with a simpler question.<\/p>\n\n\n<noscript class=\"ninja-forms-noscript-message\">\n\tNotice: JavaScript is required for this content.<\/noscript>\n<style>\r\n\r\n        \/* PLUGIN WIDE STYLES *\/\r\n    \r\n        .nf-form-content .nf-field-container.textarea-container .nf-field-element .ninja-forms-field {\r\n                                    border: .0625rem solid #666; border-radius: .25rem;                    }\r\n        .nf-form-content .nf-field-container.date-container .nf-field-element .ninja-forms-field {\r\n                                    height: 3.375rem; border: .0625rem solid #666; border-radius: .25rem; padding-left: .5rem;                    }\r\n        .nf-form-content .nf-field-container.number-container .nf-field-element .ninja-forms-field {\r\n                                    border: .0625rem solid #666; border-radius: .25rem;                    }\r\n    <\/style><style>\r\n\r\n        \/* FIELDS 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our&nbsp;<\\\/span><a href=\\\"https:\\\/\\\/www.wework.com\\\/legal\\\/terms-of-service\\\" target=\\\"_blank\\\" style=\\\"font-size: 13.3333px;\\\">Terms of Service<\\\/a><span style=\\\"font-size: 13.3333px;\\\">&nbsp;and acknowledge our&nbsp;<\\\/span><a href=\\\"https:\\\/\\\/www.wework.com\\\/legal\\\/global-privacy-policy\\\" style=\\\"font-size: 13.3333px;\\\">Global Privacy Policy<\\\/a><span style=\\\"font-size: 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       <script id=\"nf-tmpl-cell\" type=\"text\/template\">\r\n            <nf-fields><\/nf-fields>\r\n        <\/script>\r\n\r\n        <script id=\"nf-tmpl-row\" type=\"text\/template\">\r\n            <nf-cells><\/nf-cells>\r\n        <\/script>\r\n\r\n        \n\n\n<h2  id=\"what-is-a-lease\"class=\"wp-block-heading\"><strong>What is a lease?<\/strong><\/h2>\n\n\n\n<p>Put simply, a lease is a contractual agreement between somebody who owns an asset (a lessor) and somebody who wants the right to use that asset (a lessee). That asset can be almost anything, including vehicles, land, homes, equipment, and office space.<\/p>\n\n\n\n<p>In this article, we\u2019re talking about property leases, specifically <a href=\"https:\/\/www.wework.com\/ideas\/professional-development\/business-solutions\/commercial-real-estate-lease-types\">commercial leases<\/a>. Each of the leases we\u2019re discussing is a different way of calculating which party pays for what, and who takes on the risk and responsibility of shared building expenses.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"2048\" height=\"1152\" src=\"\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20210906_6900DallasParkway_02W108_19_v1-scaled.jpg\" alt=\"\" class=\"wp-image-3000050062\" srcset=\"https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20210906_6900DallasParkway_02W108_19_v1-scaled.jpg?w=2048 2048w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20210906_6900DallasParkway_02W108_19_v1-scaled.jpg?w=400 400w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20210906_6900DallasParkway_02W108_19_v1-scaled.jpg?w=800 800w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20210906_6900DallasParkway_02W108_19_v1-scaled.jpg?w=1120 1120w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20210906_6900DallasParkway_02W108_19_v1-scaled.jpg?w=1440 1440w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20210906_6900DallasParkway_02W108_19_v1-scaled.jpg?w=1536 1536w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><figcaption><a href=\"https:\/\/www.wework.com\/buildings\/6900-dallas-parkway--dallas-fort-worth--TX\" target=\"_blank\" rel=\"noreferrer noopener\">WeWork 6900 Dallas Parkway<\/a> in Plano, TX.<\/figcaption><\/figure>\n\n\n\n<p>Market forces tend to even out the cost differences between each type of lease structure over a long-enough term, so you\u2019ll often find that no single type of lease is cheaper or better overall. Which one works best for you\u2014as either a tenant or a landlord\u2014is subjective and comes down to individual circumstances as well as the wider trends of the property market.<\/p>\n\n\n\n<h2  id=\"different-types-of-leases\"class=\"wp-block-heading\"><strong>Different types of leases<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Triple net lease (NNN)<\/strong><\/h3>\n\n\n\n<p>In a triple net lease, the tenant is responsible for paying the base rent to the landlord, plus three key expenses: the cost of common area maintenance, property taxes, and building insurance.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Absolute net lease<\/strong><\/h3>\n\n\n\n<p>In an absolute net lease, the tenant is responsible for almost everything. That includes the base rent, plus the costs of a triple net lease as described above. On top of that, the tenant is on the hook for any major repairs to the property, such as replacing the roof, structure, and windows.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Modified gross lease<\/strong><\/h3>\n\n\n\n<p>A modified gross lease is a more straightforward and flexible agreement between a tenant and a landlord. Under a modified gross lease, the rent quoted includes everything\u2014that is, the base rent, common area maintenance, property taxes, and building insurance\u2014but typically excludes utility bills or other costs.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Full-service lease<\/strong><\/h3>\n\n\n\n<p>A full-service lease is a type of gross lease in which the rent is paid as a single lump sum to the landlord, who uses that money to cover every expense involved in the property\u2019s operation. This includes the base rent, maintenance, property taxes, building insurance, and utilities.<\/p>\n\n\n\n<h2  id=\"what-is-a-triple-net-nnn-lease\"class=\"wp-block-heading\"><strong>What is a triple net (NNN) lease?<\/strong><\/h2>\n\n\n\n<p>The triple net lease is the most common type of lease you\u2019ll encounter when searching for <a href=\"https:\/\/www.wework.com\/ideas\/professional-development\/business-solutions\/what-is-commercial-real-estate\">commercial real estate<\/a>. This type of lease requires the tenant of a property to pay for three net costs on top of their base rent. Those costs are taxes, maintenance, and insurance.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"2048\" height=\"1152\" src=\"\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20212809_260_Queen_Street_02-102_10_v1-scaled.jpg\" alt=\"\" class=\"wp-image-3000050063\" srcset=\"https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20212809_260_Queen_Street_02-102_10_v1-scaled.jpg?w=2048 2048w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20212809_260_Queen_Street_02-102_10_v1-scaled.jpg?w=400 400w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20212809_260_Queen_Street_02-102_10_v1-scaled.jpg?w=800 800w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20212809_260_Queen_Street_02-102_10_v1-scaled.jpg?w=1120 1120w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20212809_260_Queen_Street_02-102_10_v1-scaled.jpg?w=1440 1440w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20212809_260_Queen_Street_02-102_10_v1-scaled.jpg?w=1536 1536w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><figcaption><a rel=\"noreferrer noopener\" href=\"https:\/\/www.wework.com\/buildings\/260-queen-street--brisbane--QLD\" target=\"_blank\">WeWork 260 Queen Street<\/a> in Brisbane, Australia. <\/figcaption><\/figure>\n\n\n\n<p>A triple net lease is the flipside to a gross lease, where the tenant pays a simplified, all-inclusive rent to the landlord, who uses that cash to cover the expenses of running the building as they see fit.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Triple net lease operation<\/strong><\/h3>\n\n\n\n<p>In a typical triple net lease, the additional costs of maintenance, insurance, and taxes are passed through to the tenant every month and are proportional to the tenant\u2019s share of the whole building. In this way, the base rent and the three nets are paid for simultaneously. This isn\u2019t always the case. In some triple net leases, the additional expenses can be charged to the tenant on a quarterly or annual basis.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Pass-through expenses<\/strong><\/h3>\n\n\n\n<p>The three N&#8217;s in a triple net lease refer to the three pass-through expenses the tenant must pay for on top of their rent. Because these costs are paid directly by the tenant, the tenant has a greater degree of control and oversight over how their money is spent and the standard of service they receive in return.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Maintenance: <\/strong><a href=\"https:\/\/www.wework.com\/ideas\/professional-development\/business-solutions\/top-10-commercial-real-estate-terms\">Common area maintenance<\/a> refers to the charges involved in the upkeep, renovation, and repair of the shared parts of the building, such as hallways, elevators, lobbies, restrooms, and parking lots.&nbsp;<\/li><li><strong>Taxes: <\/strong>Property taxes are paid to the local government to cover the public cost of servicing the building and the surrounding community, and are typically based on the value of the property. It pays for everything from road infrastructure and waste collection to law enforcement and fire protection.<\/li><li><strong>Insurance: <\/strong>Building insurance protects the owner from the cost of rebuilding or repairing the property following unexpected events like flooding, fires, or storm damage. It can also include liability insurance to cover against claims for injury suffered while on the property.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Triple net lease quotes<\/strong><\/h3>\n\n\n\n<p>An office space listing with a triple net lease will usually quote the base rent. For example, a commercial property might be listed as \u201c$32 per foot, triple net\u201d or \u201c$32\/sq ft\/year, NNN.\u201d If not shown, you might have to ask the landlord or agent how much the pass-through expenses cost. These are ordinarily given per square foot, so they can be easily added to the base rent.<\/p>\n\n\n\n<h2  id=\"triple-net-lease-pros-and-cons\"class=\"wp-block-heading\"><strong>Triple net lease pros and cons<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Pros<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Fewer responsibilities for the landlord. <\/strong>Because the tenant is responsible for the costs of common area maintenance, taxes, and building insurance, the landlord doesn\u2019t have to worry about micromanaging these parts of the lease on a month-to-month basis.<\/li><li><strong>Passive income for the landlord. <\/strong>From the landlord\u2019s perspective, triple net leases are relatively hands-off compared to a gross lease, and so they\u2019re ideally structured to generate a reliable stream of passive rental income.<\/li><li><strong>Unexpected charges are covered by the lessee.<\/strong> Any increase in the cost of running a building will eventually be recouped in any type of commercial real estate lease, but a triple net lease protects the landlord from short-term fluctuations in the cost of property taxes and common area maintenance fees.<\/li><li><strong>Lower base rent for the tenant. <\/strong>Because the tenant is paying all of the building\u2019s expenses themselves, the base rent in a triple net lease is usually lower than other types of leases.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Cons<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Shared expenses can rise. <\/strong>Depending on the specific terms of the triple net lease, an uptick in vacancies in a building can mean a sudden increase in the shared expenses a single tenant is expected to cover.&nbsp;<\/li><li><strong>High renovation costs for the tenant.<\/strong> Because expenses are passed through from the landlord to the tenant, any <a href=\"https:\/\/www.wework.com\/ideas\/professional-development\/business-solutions\/commercial-real-estate-build-out-costs\">renovation costs<\/a> are effectively paid by the tenant up-front rather than paid back through marginally increased rent over the entire term of the lease.<\/li><\/ul>\n\n\n\n<h2  id=\"what-is-a-gross-lease\"class=\"wp-block-heading\"><strong>What is a gross lease?<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-image size-full is-style-default\"><img loading=\"lazy\" decoding=\"async\" width=\"2048\" height=\"1152\" src=\"\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20211409_77_Leadenhall_Street_01A101_10_v1-scaled.jpg\" alt=\"\" class=\"wp-image-3000050064\" srcset=\"https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20211409_77_Leadenhall_Street_01A101_10_v1-scaled.jpg?w=2048 2048w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20211409_77_Leadenhall_Street_01A101_10_v1-scaled.jpg?w=400 400w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20211409_77_Leadenhall_Street_01A101_10_v1-scaled.jpg?w=800 800w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20211409_77_Leadenhall_Street_01A101_10_v1-scaled.jpg?w=1120 1120w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20211409_77_Leadenhall_Street_01A101_10_v1-scaled.jpg?w=1440 1440w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/Print_300DPI-20211409_77_Leadenhall_Street_01A101_10_v1-scaled.jpg?w=1536 1536w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/><figcaption><a href=\"https:\/\/www.wework.com\/buildings\/77-leadenhall-street--london\" target=\"_blank\" rel=\"noreferrer noopener\">WeWork 77 Leadenhall Street<\/a> in London.<\/figcaption><\/figure>\n\n\n\n<p>In a gross lease, the rent is an easy-to-understand, all-inclusive amount. This is a more straightforward way of calculating what the landlord is owed, as the tenant pays a lump sum that includes their base rent plus the usual NNN expenses mentioned above.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Gross lease operation<\/strong><\/h3>\n\n\n\n<p>In a full-service gross lease, even the utilities are rolled into the rent charge. This protects the tenant from the variable cost of things like electricity and water, so they can more easily forecast their costs without worrying about unexpected bills.<\/p>\n\n\n\n<p>A modified gross lease includes only the base rent and the NNN expenses, but passes the cost of utilities and any other expenses through to the tenant.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Gross lease quotes<\/strong><\/h3>\n\n\n\n<p>You\u2019ll usually see a gross lease quoted as a single amount per square foot. It will also be obvious whether the lease is modified gross or full-service. For example, a gross lease could appear as \u201c$50\/sq ft\/year, modified gross.\u201d<\/p>\n\n\n\n<h2  id=\"gross-lease-pros-and-cons\"class=\"wp-block-heading\"><strong>Gross lease pros and cons<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Pros<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Higher rent for the landlord. <\/strong>Because<strong> <\/strong>a gross lease combines all of the building\u2019s major expenses into a single, all-inclusive quote, the actual rent paid to the landlord is higher. And since the landlord is responsible for funding and managing the building\u2019s upkeep, they can better control these costs.<\/li><li><strong>Exact monthly rental cost for the tenant. <\/strong>Since everything is included in a full-service lease, the amount paid by the tenant shouldn\u2019t fluctuate over the course of the term. In a modified gross lease, the cost of metered utilities will change from month to month, but a tenant will still enjoy much greater stability in their financial plans compared to a triple net lease.&nbsp;<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Cons<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Higher rent for the tenant.<\/strong> The obvious reciprocal to the above is that, as a tenant, you\u2019ll be the one paying more in rent. In exchange for this, the tenant is insulated from any fluctuating costs of maintenance, tax, and insurance.<\/li><li><strong>Unexpected expenses for the landlord. <\/strong>In a gross lease, common area maintenance (CAM) charges and other costs are the landlord\u2019s responsibility. If these expenses suddenly rise, say, because an elevator needs repairing or energy prices increase, then the landlord takes the hit.<\/li><\/ul>\n\n\n<div class=\"related-articles-sticky related-articles-sticky--sticky-on-desktop\">\r\n        <div class=\"related-articles-sticky__holder\">\r\n            <div class=\"ray-grid\">\r\n                <div class=\"ray-grid__cell--span-full\">\r\n                    <div class=\"related-articles-sticky__header-wrapper\">\r\n                        <h3 class=\"ray-text--h3 related-articles-sticky__block-title\">\r\n                            Related articles\r\n                        <\/h3>\r\n                    <\/div>\r\n                    <div class=\"related-articles-sticky__wrapper\">\r\n                        \r\n                            <div class=\"related-articles-sticky__item\">\r\n                                <div class=\"related-articles-sticky__image-wrapper\">\r\n                                    <a href=\"https:\/\/www.wework.com\/ideas\/professional-development\/business-solutions\/temporary-office-space-what-it-is-and-how-to-choose-one\" class=\"ray-image ray-image--1by1\">\r\n                                        <img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"2048\" height=\"1152\" src=\"https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2023\/01\/Web_150DPI-20221805_830-NE-Holladay-St_2-Twitter-scaled.jpg?resize=2048%2C1152\" class=\"related-articles-sticky__image\" alt=\"\" srcset=\"https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2023\/01\/Web_150DPI-20221805_830-NE-Holladay-St_2-Twitter-scaled.jpg?w=2048 2048w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2023\/01\/Web_150DPI-20221805_830-NE-Holladay-St_2-Twitter-scaled.jpg?resize=800%2C450 800w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2023\/01\/Web_150DPI-20221805_830-NE-Holladay-St_2-Twitter-scaled.jpg?resize=1440%2C810 1440w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2023\/01\/Web_150DPI-20221805_830-NE-Holladay-St_2-Twitter-scaled.jpg?resize=400%2C225 400w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2023\/01\/Web_150DPI-20221805_830-NE-Holladay-St_2-Twitter-scaled.jpg?resize=1120%2C630 1120w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2023\/01\/Web_150DPI-20221805_830-NE-Holladay-St_2-Twitter-scaled.jpg?resize=1536%2C864 1536w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/>\r\n                                    <\/a>\r\n                                <\/div>\r\n                                <div class=\"related-articles-sticky__container\">\r\n                                    <a href=\"https:\/\/www.wework.com\/ideas\/professional-development\/business-solutions\/temporary-office-space-what-it-is-and-how-to-choose-one\">\r\n                                        <div class=\"related-articles-sticky__caption-title\">\r\n                                            Temporary office space: What it is and how to choose one\r\n                                        <\/div>\r\n\r\n                                        <div class=\"author\">\r\n    By\r\n    Steve Hogarty\r\n  <\/div>\r\n                                    <\/a>\r\n                                <\/div>\r\n                            <\/div>\r\n                        \r\n                            <div class=\"related-articles-sticky__item\">\r\n                                <div class=\"related-articles-sticky__image-wrapper\">\r\n                                    <a href=\"https:\/\/www.wework.com\/ideas\/workspace-solutions\/flexible-products\/the-next-evolution-of-commercial-real-estate\" class=\"ray-image ray-image--1by1\">\r\n                                        <img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"2048\" height=\"1152\" src=\"https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/22012019_Sydney_383-George-Street_Conference-Room_01_v2-scaled.jpg?resize=2048%2C1152\" class=\"related-articles-sticky__image\" alt=\"\" srcset=\"https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/22012019_Sydney_383-George-Street_Conference-Room_01_v2-scaled.jpg?w=2048 2048w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/22012019_Sydney_383-George-Street_Conference-Room_01_v2-scaled.jpg?w=400 400w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/22012019_Sydney_383-George-Street_Conference-Room_01_v2-scaled.jpg?w=800 800w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/22012019_Sydney_383-George-Street_Conference-Room_01_v2-scaled.jpg?w=1120 1120w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/22012019_Sydney_383-George-Street_Conference-Room_01_v2-scaled.jpg?w=1440 1440w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/11\/22012019_Sydney_383-George-Street_Conference-Room_01_v2-scaled.jpg?w=1536 1536w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/>\r\n                                    <\/a>\r\n                                <\/div>\r\n                                <div class=\"related-articles-sticky__container\">\r\n                                    <a href=\"https:\/\/www.wework.com\/ideas\/workspace-solutions\/flexible-products\/the-next-evolution-of-commercial-real-estate\">\r\n                                        <div class=\"related-articles-sticky__caption-title\">\r\n                                            The next evolution of commercial real estate\r\n                                        <\/div>\r\n\r\n                                        <div class=\"author\">\r\n    By\r\n    WeWork\r\n  <\/div>\r\n                                    <\/a>\r\n                                <\/div>\r\n                            <\/div>\r\n                        \r\n                            <div class=\"related-articles-sticky__item\">\r\n                                <div class=\"related-articles-sticky__image-wrapper\">\r\n                                    <a href=\"https:\/\/www.wework.com\/ideas\/research-insights\/expert-insights\/how-do-you-quantify-the-value-of-flexibility\" class=\"ray-image ray-image--1by1\">\r\n                                        <img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" width=\"2048\" height=\"1152\" src=\"https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/09\/20213107_6001_Cass_02101_08_v1-scaled.jpg?resize=2048%2C1152\" class=\"related-articles-sticky__image\" alt=\"\" srcset=\"https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/09\/20213107_6001_Cass_02101_08_v1-scaled.jpg?w=2048 2048w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/09\/20213107_6001_Cass_02101_08_v1-scaled.jpg?w=400 400w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/09\/20213107_6001_Cass_02101_08_v1-scaled.jpg?w=800 800w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/09\/20213107_6001_Cass_02101_08_v1-scaled.jpg?w=1120 1120w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/09\/20213107_6001_Cass_02101_08_v1-scaled.jpg?w=1440 1440w, https:\/\/www.wework.com\/ideas\/wp-content\/uploads\/sites\/4\/2021\/09\/20213107_6001_Cass_02101_08_v1-scaled.jpg?w=1536 1536w\" sizes=\"auto, (max-width: 1000px) 100vw, 1000px\" \/>\r\n                                    <\/a>\r\n                                <\/div>\r\n                                <div class=\"related-articles-sticky__container\">\r\n                                    <a href=\"https:\/\/www.wework.com\/ideas\/research-insights\/expert-insights\/how-do-you-quantify-the-value-of-flexibility\">\r\n                                        <div class=\"related-articles-sticky__caption-title\">\r\n                                            How do you quantify the value of flexibility?\r\n                                        <\/div>\r\n\r\n                                        <div class=\"author\">\r\n    By\r\n    Nikhil Chanrai\r\n  <\/div>\r\n                                    <\/a>\r\n                                <\/div>\r\n                            <\/div>\r\n                                            <\/div>\r\n                <\/div>\r\n            <\/div>\r\n        <\/div>\r\n    <\/div>\r\n\n\n\n<h2  id=\"a-triple-net-nnn-lease-versus-a-gross-lease\"class=\"wp-block-heading\"><strong>A triple net (NNN) lease versus a gross lease<\/strong><\/h2>\n\n\n\n<p>Let\u2019s summarize the key differences between triple net leases and gross leases.<\/p>\n\n\n\n<p>A triple net lease places the responsibility and risk of managing the property with the tenant, who in return pays a lower base rent. This means the landlord can take a more hands-off approach to property upkeep and collect a more stable rental income, making triple net leases an enticing proposition for owners with large portfolios.<\/p>\n\n\n\n<p>For the tenant, taking on the burden of managing the property themselves comes with upsides. A tenant in a triple net lease has complete control over their business expenses and can audit CAM providers and book their own contractors to save on costs. A counterpoint to this is that the tenant is on the hook for unexpected repairs or other nasty surprises, which would be paid for by the landlord in a gross lease.<\/p>\n\n\n\n<p>In a gross lease, the landlord pays for all expenses associated with running the property, and the tenant pays a higher base rent to cover this. A modified gross lease passes <em>some<\/em> expenses through to the tenant, usually metered utilities such as water and electricity. This greatly simplifies the tenant\u2019s budget, as they no longer have to worry about operating costs rising and falling. However, it also removes the tenant\u2019s ability to keep those operating costs down.<\/p>\n\n\n\n<p>There are pros and cons to both types of leases. Triple net leases generally favor landlords, as they shift risk to the tenants, while full-service and modified gross leases have benefits for both parties and can be negotiated to strike an amenable balance. Working with a <a href=\"https:\/\/www.wework.com\/ideas\/professional-development\/management-leadership\/commercial-real-estate-brokers\">real estate broker<\/a>, and understanding how these lease structures differ and which responsibilities you\u2019re willing to take on, is key to knowing which one is best for your business.<\/p>\n\n\n\n<p>WeWork simplifies the process of securing office space for your business with flexible coworking solutions. <a href=\"https:\/\/www.wework.com\/solutions\/wework-on-demand\">WeWork On Demand<\/a> offers pay-as-you-go access to shared office spaces in more than 250 locations, while <a href=\"https:\/\/www.wework.com\/solutions\/wework-all-access\">WeWork All Access<\/a> unlocks WeWork locations in cities around the world.<\/p>\n\n\n\n<p><em>Steve Hogarty is a writer and journalist based in London. He is the travel editor of <\/em>City AM<em> newspaper and the deputy editor of <\/em>City AM Magazine<em>, where his work focuses on technology, travel, and entertainment.<\/em><\/p>\n\n\n<div\r\n  data-block_60e8695ae0589\r\n  class=\"sticky-cta align sticky-cta--bottom sticky-cta--collection--bottom sticky-cta--right sticky-cta--collection\"\r\n>\r\n  <div class=\"sticky-cta__copy sticky-cta--collection__copy\">\r\n    <p>Rethinking your workspace?<\/p>\n\r\n  <\/div>\r\n\r\n  <div class=\"sticky-cta__button-wrap sticky-cta--collection__button\">\r\n    <button class=\"ray-button ray-button--primary sticky-cta__button\">\r\n      <a\r\n        href=\"#nf-form-31-cont\"\r\n        class=\"sticky-cta__link sticky-cta--collection__link\">\r\n        Get in touch\r\n      <\/a>\r\n    <\/button>\r\n  <\/div>\r\n<\/div>\r\n","protected":false},"excerpt":{"rendered":"<p>Take a look at the pros and cons of the two most popular commercial lease types<\/p>\n","protected":false},"author":1849,"featured_media":3000050065,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"template-single-collection.blade.php","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[43910,43902],"tags":[38931,43880,43882],"class_list":["post-3000050054","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-solutions","category-professional-development","tag-commercial-real-estate","tag-real-estate-strategy","tag-hybrid-space"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.4 (Yoast SEO v25.3.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>NNN lease versus a gross lease: What\u2019s the difference?<\/title>\n<meta name=\"description\" content=\"Searching for commercial space? 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