When it comes to leasing a property in residential or commercial real estate, there are two main types of leases: gross and triple net lease. Both have their own benefits and drawbacks, so it's important to understand the differences before signing on the dotted line. In this blog post, we'll take a closer look at both lease types and help you decide which one is right for you. Let's get started!
What Is a Triple Net Lease?
Also known as NNN lease, a triple net lease is a commercial leasing arrangement in which the tenant agrees to pay all operating expenses related to the property, in addition to rent and any other agreed-upon charges. The tenant is typically responsible for utilities, insurance, property taxes, and maintenance and repairs. Triple net leases are often used for properties that require significant upkeep or are considered high-risk, such as industrial facilities or warehouses.
Triple net leases can be beneficial for landlords because they provide a stable income stream and minimize the landlord's exposure to potential damages or liabilities. However, tenants should be aware of the potential risks associated with triple net leases, such as unexpected repair costs or increases in property taxes. Ultimately, triple net leases can be a good option for both landlords and tenants, but it is important to understand the terms of the lease agreement before signing anything.
Triple Net leases are the most common type of lease used for shopping centers and retail centers.
What Is a Gross Lease?
A gross lease is a type of commercial lease in which the tenant pays rent that covers the base rent for the property, as well as taxes, insurance, and common area maintenance (CAM) fees. The landlord is responsible for paying all other expenses associated with the property.
Gross leases are typically used for office space and smaller retail spaces. They are less common for industrial properties, since the tenant usually needs to pay for their own utilities and CAM fees can be significant.
Under a gross lease, the tenant has more predictable monthly expenses, but they may end up paying more in the long run if the landlord raises the rent or increases CAM fees. Gross leases are sometimes called full-service leases or all-inclusive leases.
Commercial Leasing In FL, MD, DE, PA, MD, NJ, and NY
After studying the two individually, you should have developed a clear understanding of the differences between a gross lease and a triple net lease. If you need reliable tenants for the commercial properties you own, contact Milbrook Properties today!