4 Types of Commercial Property Leases
2 min read
Understanding the different types of commercial property leases in essential for landlords and tenants alike. Each lease type distributes costs differently, impacting the financial responsibilities and commitment of both parties. In this article, we’ll break down four most common lease structures: single net lease, double net lease, triple net lease, and gross lease.
Single Net Lease (N Lease)
In a single net lease, the tenant is responsible for paying the base rent plus property taxes. The landlord covers maintenance, insurance, and other operational costs. This type of lease offers tenants a lower base rent, but they take on a small share of the property expenses. Single net leases are a less common form of commercial leases.
Double Net Lease (NN Lease)
The double net lease or also known as net-net lease, increases the tenant’s responsibility. In addition to rent, the tenant also pays property taxes and building insurance. The landlord continues to cover maintenance and structural repairs.
Triple Net Lease (NNN Lease)
This is one of the most common lease types in commercial real estate. In a triple net lease, the tenant is responsible for property taxes, insurance, and maintenance, alongside rent. This arrangement provides landlords with minimal expense-related concerns. This type of lease is common for freestanding commercial buildings but can also be used in single-family residential rental leases.
Gross Lease
In a gross lease, tenants pay a single flat fee for rent, and the landlord covers property taxes, insurance, and maintenance. This is a more straightforward agreement for tenants, who don’t need to worry about unpredictable expenses.
Choosing the right lease type depends on the needs and priorities of both the landlords and tenants. Whether you prefer a predictable gross lease or a net lease with shared costs, it’s crucial to fully understand the financial implications of each agreement.
References
Chen, J. (n.d.-b). Double net lease: Definition, how it works, vs. Triple net lease. Investopedia. https://www.investopedia.com/terms/d/double-net-lease.asp
Investopedia. (n.d.). Single net lease: What it is, how it works. Investopedia. https://www.investopedia.com/terms/s/single-net-lease.asp
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