Side-by-Side Comparison

NNN Lease vs. Gross Lease: Which Costs More?

A $5,000 NNN base rent vs. a $6,500 gross lease — which is actually cheaper over 5 years?

Triple Net (NNN) Lease

$5,000 base rent + $1,200/month NNN = $6,200/month total

$74,400 year 1 cost
  • ✓ Lower base rent provides psychological comfort
  • ✓ Operating expense transparency — you see every cost
  • ✓ In low-expense years, NNN can be cheaper than gross
  • ✗ Operating expenses rise unpredictably — property taxes, insurance, maintenance
  • ✗ Year-end CAM reconciliation creates surprise bills of $5,000-$20,000
  • ✗ No cost certainty — budget planning is harder

Gross Lease

$6,500/month all-in (landlord covers all operating expenses)

$78,000 year 1 cost
  • ✓ Predictable monthly cost — easy to budget
  • ✓ No CAM reconciliation surprise bills
  • ✓ Rising operating costs are the landlord's problem (within lease escalation caps)
  • ✗ Higher base rent than equivalent NNN space
  • ✗ Rent escalation provisions still apply
  • ✗ Landlord may over-build operating costs into base rent
★ Recommended

The Verdict: Gross Lease

Gross leases win on cost predictability and long-term certainty. NNN leases can be cheaper in years 1-2 but typically become more expensive as operating costs escalate. For most small business tenants, the predictability of a gross lease — no reconciliation surprises, no variable CAM — is worth a $200-$500/month premium.

Key Factors in This Decision

  • Operating expense growth rate in your market
  • Building age and expected capital expenditures
  • Your ability to absorb variable monthly costs

Frequently Asked Questions

Which lease type is more common in office buildings?
Modified gross leases are most common in Class A and B office buildings. True NNN leases are more common in retail and industrial.
Can I convert a NNN lease to gross at renewal?
Yes — if the landlord agrees. At renewal, all terms are re-negotiable. Offer a longer term in exchange for conversion to gross lease structure.

Know Which Option Is in Your Lease.

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