NNN vs gross lease: what you actually pay
Two offices with the same rent on the listing can cost very different amounts each month. The difference is the lease type: who pays the building’s taxes, insurance, upkeep and utilities. Here is what each type means in practice, a worked example, and the questions that get you the real monthly number.
The four lease types at a glance
| Lease type | In short |
|---|---|
| Full service | One payment covers almost everything. |
| Gross | Rent covers the building; utilities vary. |
| Modified gross | In between: the landlord covers some costs, you cover others. |
| Triple net (NNN) | Base rent plus your share of taxes, insurance and maintenance. |
Landlords do not use these names consistently, especially in smaller buildings. Treat the label as a starting point, then ask who pays each cost.
Full service
One payment covers almost everything.
The rent covers the building’s taxes, insurance and upkeep, and usually your electric, heat, water and cleaning too. It is the simplest to budget and the most common in larger multi-tenant office buildings. The landlord prices those costs into the rent, so the number looks higher than a triple-net rent for the same suite.
Ask. Which utilities are really included, and is there a cap on after-hours heat or air conditioning?
Gross
Rent covers the building; utilities vary.
The landlord pays the building’s taxes, insurance and maintenance out of the rent. Utilities are where gross leases differ: some include them, many have the tenant pay electric. Small local landlords often call any single-number rent “gross”, so the label alone does not tell you much.
Ask. Which bills will come to me directly, and what did they cost the last tenant?
Modified gross
In between: the landlord covers some costs, you cover others.
There is no standard split. A common version: the landlord pays taxes, insurance and common-area upkeep, and you pay your own electric and cleaning. Another common version has you pay any increase in building costs above a starting year, called a base year or expense stop. Two modified gross leases can work very differently.
Ask. Is there a base year or expense stop? If so, what year, and what were the costs that year?
Triple net (NNN)
Base rent plus your share of taxes, insurance and maintenance.
You pay a base rent and, on top of it, your share of the building’s property taxes, insurance and common-area maintenance (CAM). Your share is usually your suite’s square feet divided by the building’s. The landlord bills an estimate each month and settles up after the year ends, so you can owe more. Utilities are almost always on you as well. Retail, medical and single-tenant buildings often lease this way.
Ask. What were the actual NNN charges per square foot last year and the year before, and what is in CAM?
A worked example
Round numbers for illustration only. They are not market rents.
Two 1,500 square foot suites. Rent is often quoted per square foot per year, so divide by 12 for the month.
| Cost each month | Suite A, gross | Suite B, NNN |
|---|---|---|
| Rent quoted | $24.00/sf/yr | $16.00/sf/yr + NNN |
| Base rent | $3,000 | $2,000 |
| Taxes, insurance, CAM at $7.00/sf/yr | Included | $875 |
| Electric and heat (your own meter) | $300 | $300 |
| Cleaning | $150 | $150 |
| Total | $3,450 | $3,325 |
Suite B’s listing looked a third cheaper. In this example the real difference is under 4%. And Suite B’s NNN line is an estimate: if the town raises taxes or the parking lot needs repaving, that line goes up, while Suite A’s rent stays put until the lease says it changes.
Five things that change an NNN bill
- The year-end settle-up. Monthly NNN is an estimate. Ask what the last two settle-ups were and whether the landlord has ever billed extra.
- What is in CAM. Landscaping, snow, lot lighting and common cleaning are normal. Ask whether management fees, roof replacement or other big repairs are passed through.
- A cap. Some leases limit how much controllable CAM can rise each year. It is worth asking for.
- Your share. Check the suite’s square feet and the building total used to work out your percentage.
- Heating and cooling equipment. In many NNN leases the tenant maintains or replaces the unit serving the suite. Ask its age and who pays when it fails.
Rentable vs usable square feet
In multi-tenant buildings, rent is often charged on rentable square feet: your suite plus a share of hallways, lobby and restrooms. The space you can actually furnish, the usable area, is smaller. The difference is called the load factor. Ask for both numbers and measure the suite yourself before comparing prices per square foot.
Questions to get the real monthly cost
- Which of these do I pay, and roughly how much a month: electric, heat, water, internet, cleaning, snow, trash, taxes, insurance, CAM?
- For NNN or a base year: the last two years of actual charges, in writing.
- How and when does base rent rise each year?
- Who repairs and replaces the heating and air conditioning?
- Is the square footage rentable or usable?
SCORE’s checklist and the state’s leasing tips cover the rest of the lease. This guide is general information, not legal advice. For your draft, talk with a New Jersey lawyer.
How listings on this site show it
Each suite shows the lease type the landlord reported and the costs they say are included. An NNN or CAM amount appears only when they stated one. A monthly rent worked out from a per-square-foot price and a stated size is labeled calculated. A combined monthly figure is shown only when the extra charges are known and do not overlap: if CAM may already be inside the NNN figure, it is not added again. A missing charge is not treated as zero. If the lease type is not confirmed, ask before you compare it. Browse listed spaces.