The Three Basic Lease Types
There are essentially three types of leases used commonly in Commercial Real Estate in our market; the Triple Net Lease (NNN), Modified Gross Lease (MG), and Full Service Lease (FS) . The diagram above illustrates the degree to which each type of lease covers additional expenses. Be sure you understand your “all in” cost for your space before you move forward to commit to a space. There are other types of leases that are not used as commonly, for example, a percentage lease or a graduated lease, however, the types outlined above give you a general description of the type used in our markets.
Triple Net Lease (NNN)
Means that you pay a base rent for your space, then, on top of that you also pay building expenses for taxes, insurance and maintenance and sometime CAM (common area maintenance if there is more than one tenant in your building.)
Modified Gross Lease (MG)
Means that your rental charge per month generally covers your base rent for the space, and the Landlord may include some of the building expenses or utilities in the rent charge.
Full Service Lease (FS)
Means that you pay the Landlord one price usually per month and the space charges for rent, building expenses and utilities are all included in your monthly rent charge.
Understand your all in costs before you sign a commercial lease.