Understanding the differences between commercial lease types is essential for making informed financial and operational decisions. Below, we compare the most common lease structures, including gross, modified gross, triple net, percentage, and absolute net leases, to help you assess which lease may align best with your organization’s needs.
New to these lease structures? Start with The 5 Main Types of Commercial Leases before diving into the comparisons below.
Triple Net Lease (NNN Lease) vs. Gross Lease
The key difference between a triple net lease and a gross lease is who covers additional expenses. In a triple net lease, the tenant pays the base rent plus expenses for common area maintenance (CAM), property taxes, and property insurance. In a gross lease, the tenant pays a fixed rent, and the landlord covers all other property expenses. This makes it simpler for the tenant but often results in a higher rent.
Triple Net Lease (NNN Lease) vs. Modified Gross Lease
The difference between a triple net lease and a modified gross lease is the structure of expenses. Triple net leases have lower base rent with separate additional expenses, while modified gross leases combine elements of gross and net leases. In a modified gross lease, the base year rent includes certain expenses, but any increases in these expenses over the base year are charged to the tenant. This offers a balance between predictability and flexibility in managing expenses.
Triple Net Lease vs. Percentage Lease
A triple net lease requires the tenant to pay base rent plus all property expenses, offering predictable income for landlords. A percentage lease, commonly used in retail, includes a base rent plus a percentage of the tenant’s gross sales. While triple net leases prioritize cost control and clarity, percentage leases give landlords a share in tenant success—especially useful in high-traffic or seasonal locations.
Gross Lease vs. Percentage Lease
In a gross lease, tenants pay one flat rent and the landlord handles all operating expenses. A percentage lease includes a base rent plus a percentage of the tenant’s gross sales—often used when rent is tied to performance. Gross leases are straightforward and predictable, while percentage leases offer flexibility and profit-sharing potential, particularly in retail environments where foot traffic and seasonal variation impact revenue.
Gross Lease vs. Modified Gross Lease
The primary difference between a gross lease and a modified gross lease lies in how expenses are handled. In a gross lease, the tenant pays a fixed rent while the landlord covers all property expenses. A modified gross lease, however, splits certain costs—such as utilities, maintenance, or property taxes—between the landlord and tenant. This creates more flexibility for tenants who want some cost predictability but are open to sharing specific responsibilities.
Absolute Lease vs. Triple Net Lease
While both lease types shift operating costs to the tenant, an absolute net lease goes a step further. In a triple net lease, the tenant pays for taxes, insurance, and maintenance, but the landlord may still retain responsibility for structural repairs. With an absolute net lease, the tenant assumes all expenses with no exceptions, including roof or foundation repairs. These long-term leases are typically non-negotiable and used in single-tenant, investment-grade retail properties.