Gross Lease

A lease where the landlord pays most or all operating expenses and the tenant pays a single, predictable rent.

What It Is

In a gross lease — sometimes called a full-service lease — the tenant pays one rent amount and the landlord covers most property-level costs out of that rent. Depending on the property, those costs may include property taxes, building insurance, common area maintenance, and sometimes utilities and janitorial service.

Gross leases are most common in office buildings and in smaller multi-tenant properties where separating expenses tenant by tenant would be impractical.

Why It Matters

Predictability has real value for a business. A gross lease makes monthly occupancy cost easier to budget because increases in taxes, insurance, or maintenance generally fall on the landlord rather than arriving as a mid-year invoice.

That predictability is priced in. Gross rent is typically quoted higher per square foot than net rent for comparable space, because the landlord is carrying expense risk. Comparing a gross quote to a net quote without adding the estimated expenses to the net number produces a misleading result.

Many gross leases include an expense stop or base-year provision, meaning the landlord absorbs expenses only up to a defined level and the tenant pays a share of increases above it. That single clause can change the economics considerably.

Common Misconceptions

"Gross means I will never receive another bill." Many gross leases still pass through increases above a base year, and separately metered utilities, interior repairs, and signage costs often remain the tenant's.
"Gross is always more expensive." It is usually a higher quoted rate, but the total occupancy cost may be similar or lower once expenses are added to a net alternative.
"All gross leases are the same." Full-service, modified gross, and industrial gross vary widely in what the landlord actually covers.

Questions to Ask

Exactly which expenses does the quoted rent include?
Is there a base year or expense stop, and how are increases calculated?
Which utilities are separately metered and billed to me?
Who is responsible for interior repairs, HVAC service, and janitorial?
How has the landlord's expense load changed over the past three years?

Other Lease Terms

Questions About a Commercial Lease?

Whether you're evaluating space for your business or preparing to lease your property, I'd be happy to help you review the terms, understand the economics, and negotiate an agreement that fits your plans.

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