Triple Net, Gross, or Modified Gross? Your Lease Type Decoded
If you’re searching for commercial space in the Raleigh-Durham-Chapel Hill (Triangle) area, you’ll quickly encounter terms like triple net lease and gross lease. These are types of commercial leases that determine how rent, operating expenses, and property costs are divided between landlord and tenant.
Understanding these structures before you sign is essential for protecting your bottom line and avoiding surprises.
1. Triple Net Lease (NNN)
In a triple net lease, the tenant pays:
Base rent
Property taxes
Building insurance
Maintenance costs
Pros:
Lower base rent compared to other lease types
More control over property maintenance standards
Cons:
Fluctuating costs from year to year
More responsibility for operating expenses
Best for: Tenants who want long-term stability in a property and are comfortable managing operating expenses.
2. Gross Lease (Full-Service Lease)
In a gross lease, the tenant pays one all-inclusive rent amount. The landlord covers:
Taxes
Insurance
Maintenance
Utilities (in many cases)
Pros:
Predictable monthly payments
Landlord handles most property expenses
Cons:
Higher base rent since operating costs are included
Less control over how expenses are managed
Best for: Businesses that want a simple, fixed monthly cost without variable expense risk.
3. Modified Gross Lease
A modified gross lease is a hybrid. The tenant and landlord split expenses in a way that’s negotiated in the lease.
Examples:
Tenant pays base rent plus utilities
Tenant pays rent plus janitorial services, while landlord covers taxes and insurance
Pros:
Flexible expense-sharing
Negotiable terms to fit both parties
Cons:
Must review lease carefully to understand responsibilities
Best for: Tenants who want some expense stability but are willing to share certain costs.
Why This Matters in the Triangle
In the Raleigh-Durham market, where office, retail, and industrial spaces have varying lease structures, knowing the differences between triple net vs gross lease (and everything in between) helps you negotiate terms that align with your business strategy and cash flow.
The Bottom Line:
Each type of commercial lease—triple net, gross, or modified gross—has its pros and cons. Understanding these before you negotiate can save you money, prevent disputes, and ensure your space works for you financially.