Commercial Lease Structures Explained: Full Service, Modified Gross, and Triple Nets

Understanding what you're actually paying before you sign.

One of the most common points of confusion in a commercial lease is not the rent number itself, it is what that number actually includes. Here is a breakdown of the three main lease structures.

Full Service Lease

Base rent includes all operating expenses, taxes, insurance, maintenance, and utilities. You pay one predictable number each month and the landlord typically handles the rest. In some markets, like the Portland metro area, some landlords bill back expenses if the building's operational costs exceed what is factored into the base rent. Be sure to inquire whether there are any additional expenses before you sign a lease.

Modified Gross Lease

You pay base rent plus your share of utilities that are not separately metered. Depending on the landlord, they may also bill back other expenses, you need to inquire. This sits in the middle between full service and triple net, giving landlords and tenants a way to split costs without the full complexity of a net lease.

Triple Net Lease (NNN)

You pay your prorated share of the property's expenses on top of base rent. The three "nets" are property tax, insurance, and CAM, common area maintenance, which can include things like landscaping, janitorial service, exterior lighting, snow or ice removal, and parking lot upkeep.

How to calculate what you will actually pay

If a space is listed at $20/SF NNN with estimated NNN charges of $2.50/SF, here is the math for a 1,200 SF space:

Base rent: $20 x 1,200 SF = $24,000/year, or $2,000/month
NNN charges: $2.50 x 1,200 SF = $3,000/year, or $250/month
Total monthly rent: $2,250

That total is what actually lands on your monthly bill, not just the headline base rent figure. Always ask for this full breakdown before comparing two lease offers side by side, since a lower base rent does not always mean a lower total cost.

Understanding which structure you are signing up for, and what is actually included, makes the difference between a lease that fits your budget and one that surprises you later. Navigating a lease is not something you need to do alone. Andi helps tenants from start to finish, finding the right space, understanding the terms, and negotiating on your behalf. In many cases, her fee is covered by the landlord, at no cost to you as the tenant. Schedule a consultation to talk through your specific lease options.