Review: Commercial Real Estate Leases
There are a wide range of commercial lease possibilities. Here are the most common forms defined:
Gross lease: The tenant pays a set amount of rent and the landlord is responsible for payment of taxes, insurance and other costs associated with owning the property.
Net lease (a/k/a closed-end lease): The tenant pays the rent plus a portion of the maintenance fees, insurance premiums and other operating expenses.
Double net lease: A lease in which the tenant pays rent, as well as all taxes and insurance expenses that arise from the use of the property. The landlord pays maintenance expenses.
Triple-net lease: This type of lease has the tenant paying for all fees and operating expenses associated with the space. Usually associated with a freestanding facility.
Shopping center leases: The tenant pays a base rate in conjunction with the square footage of the retail facility. Typically, the tenant will also pay some common charges and frequently a certain percentage of the gross sales.
Land or ground lease: The tenant leases the grounds and builds on the property. Typically, with this type of lease, all improvements on the property, including any building or buildings revert back to the landowner at the end of the lease period.