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The CRE Almanac

Gross Lease vs. NNN Lease

Published 2026-08-11

In a gross (full-service) lease, the landlord pays the property's operating expenses out of a single all-in rent; in a triple net (NNN) lease, the tenant pays base rent plus its share of property taxes, insurance, and maintenance. Most leases in practice sit between the two poles, so the label matters less than the expense provisions behind it.

The spectrum

  • Full-service gross: one rent covers everything; common in office, often paired with a base year mechanism for cost increases.
  • Modified gross: the parties split expense categories — for example, the tenant pays utilities and janitorial while the landlord covers taxes and insurance.
  • Triple net (NNN): the tenant reimburses its pro rata share of the three nets — taxes, insurance, and common area maintenance — on top of base rent.
  • Absolute net: the tenant bears essentially all costs, including structural repairs; most often seen in single-tenant deals.

Why the label misleads

“NNN” on a rent roll tells you the shape of the deal, not its content. Two triple net leases can allocate roof and structure, capital expenditures, or management fees completely differently. A “gross” lease with a base year shifts every increase above the base to the tenant, which over a long term can behave much like a net lease. Comparing quoted rents across structures requires converting each to an effective, expense-adjusted number.

What to watch for

The substance lives in the definitions: what falls within operating expenses, what is excluded, whether controllable expenses are capped, and how vacancy gross-up works. In net leases, confirm which party contracts for and pays each expense directly, since reimbursement mechanics drive both cash flow and the annual reconciliation.

In your documents

Portfolios mix structures, and the practical question — who pays for what under this lease? — has a different answer in every file. Sevrel is designed to answer that kind of question with links to the retrieved expense provisions, and to help compare structures across leases as part of lease analysis. Coverage depends on what is indexed, so confirm the review set before drawing portfolio-wide conclusions.