When it comes to leasing commercial property, multiple types of leases may be used. Understanding them can help you understand the terms and conditions that are being offered or what you are offering for a commercial space. In this blog post, we will explore the most common types of commercial leases and their key features.

• Gross Lease: A gross lease, also known as a full-service lease, is one of the simplest types of commercial leases. With these leases, the tenant agrees to pay a fixed monthly rent and the landlord covers all operating expenses like property taxes, maintenance, utilities, and insurance. This type of lease helps provide a predictable rent expense for the tenant and rental income for the landlord.
• Net Lease: Unlike a gross lease, a net lease requires the tenant to pay a portion of the operating expenses in addition to the base rent. There are three main types of net leases: single net lease (tenant pays property taxes), double net lease (tenant pays property taxes and insurance), and triple net lease (tenant pays property taxes, insurance, and maintenance). These types of leases are common in commercial real estate, especially long-term leases. They help tenants have more control over their operating expenses.
• Percentage Lease: A percentage lease is commonly used in retail settings, where the tenant pays a base rent plus a percentage of their sales revenue. This type of lease helps landlords bring in more revenue when businesses perform well. These can be attractive to startups who do not have the funds to pay for leases that are more expensive up front like a gross lease.
• Modified Gross Lease: A modified gross lease incorporates elements from both gross and net leases. In this type of lease, the tenant pays a base rent that covers most operating expenses. However, the tenant may be responsible for some operating expenses such as utilities and maintenance. The specific terms of these leases can be negotiated to a mutual agreement between the tenant and the landlord.