There are three basic types of commercial real estate leases. These leases are organized around two rent calculation methods: "net" and "gross." The gross lease typically means a tenant pays one lump sum for rent, from which the landlord pays his expenses. The net lease (“NNN”) has a smaller base rent, with other expenses paid for by the tenant. The modified gross lease is combination of the two. While terms vary widely, building by building, when evaluating options for commercial space lease, it is important to compare the different lease options paying attention to all expenses, and not just the base rental rates. Net lease base rental rates tend to be much lower, with additional expenses added for the real monthly rate.

The most important rule of commercial leases is for tenants to read their leases carefully, and clarify exactly what expenses they have responsibility for. Circumstances under which additional charges will occur should be identified and caps on expenses negotiated.

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Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should not rely solely on this information. We encourage our clients to work with a lawyer experienced in commercial and/or residential real estate matters as they can be complicated and confusing.