In commercial real estate, when a company is leasing space for the operation of their business, there is no one way to pay for that lease. In fact, there are several types of leases in commercial real estate that a tenant and landlord can negotiate. Depending on the type of business, there are some leases that may be better suited.
What Is The Definition of a Gross Lease?
One type of lease is a gross lease. This is one of the simplest commercial leases because the tenant makes fixed lump-sum payments that are all-inclusive. The gross lease definition is when the landlord is responsible for all expenses associated with the space including property taxes, insurance, and maintenance, while the tenant has a fixed rental payment. Typically, a landlord will charge a rental amount that reasonably could cover all of these expenses.
Know The Terms
From a tenant’s perspective, like any other agreement, in a gross lease it is important to be aware of the terms of the agreement and negotiate terms that comply with your business. For example, the tenant should be aware of how often custodial services are provided, and what type of services are provided to assure that the services align with the needs of the company.
Benefits of A Gross Lease
Commercial gross leases are a benefit in many cases because there is a degree of ease associated with having a fixed rental payment. Tenants can easily project expenses without the worry of other unexpected costs. Gross leases allow businesses to focus on the growth of their company and retain the additional income as the business grows.
Gross Lease vs Triple Net (NNN) Lease
As explained in one of our other blogs, What Is A Triple Net Lease?, the triple net meaning is when a tenant is responsible for paying the base rent and all other expenses that go into the property. This differs from a gross lease. As we went into in this blog, a gross lease is when the landlord is responsible for all expenses associated with the space including property taxes, insurance, and maintenance, while the tenant has a fixed rental payment.