Understanding the Three Main Lease Types
Gross Lease
You pay one rent amount. The landlord pays most building expenses. These leases feel simple, but base rent is often higher to cover landlord risk.
Net Lease
You pay rent plus some operating expenses. Costs are shared, and monthly expenses may fluctuate.
Triple Net (NNN) Lease
You pay rent plus property taxes, insurance, and maintenance. Base rent looks attractive, but total costs can vary significantly.
real world story
A retail tenant chose a Triple Net lease because the rent seemed lower. In year two, the roof required repairs and property taxes increased. The tenant’s monthly costs rose by nearly 25%. The lease allowed it — and the landlord was not obligated to absorb the increase.
Why This Matters
Listings often advertise only base rent. Additional costs may not be obvious until you review the lease in detail.
Practical Tips
- Ask for a full cost breakdown
- Review prior years’ operating expenses
Budget for increases, not just current numbers
Conclusion: No lease type is “bad.” The key is understanding risk, predictability, and how costs are shared.
Written by Sav Cheema, Commercial Real Estate Advisor with RE/MAX Elevate, serving business owners, landlords, and investors across British Columbia, Canada.
Disclaimer: This blog is for general information purposes only and does not constitute legal, accounting, tax, or professional advice. Always consult qualified legal, accounting, and real estate professionals regarding your specific situation.
